In October 2020, Alkami acquired ACH Alert, a treasury management solution enabling banks and credit unions to make Wire and ACH transactions safer and dispute resolution completely automated through Check & ACH Positive Pay, Wire & ACH Origination Verification, EDI Banking Translation, and ACH Return & ACH NOC. The payments fraud landscape has evolved drastically since April 2019 therefore the Alkami team refreshed the original article found here.
When it comes to moving money, ACH transactions are known to be a more secure option and much more rigorous for fraudsters to compromise. However, this increase in ACH fraud indicates a more complex, thought-out approach of attack. To avoid detection, fraudsters are rethinking their scams and taking chances on the belief that attacks on ACH transactions might fly under the radar.
While technology advances to remove paper and make ACH transactions possible, the same developments are propelling fraudsters to attack these payment methods. Often fraudsters are taking advantage of the operations leading up to payment initiation, rather than the actual payment methods.
This can be achieved by initiating phishing attacks or implementing malicious software to steal sensitive information and ultimately, compromise the internal systems. Some common tactics used by fraudsters include BEC, account takeover scams and initiating large volumes of disbursements right before ACH’s submission deadlines. Once the scammer has gained access to the internal system, they are free to generate ACH files and wipe accounts.
With ACH fraud occurring at an increasing rate, financial institutions should ensure they offer digital services that help businesses fight back against the fraudsters. One easy way to take a stand against ACH fraud is through ACH Positive Pay and ACH Origination Verification.
ACH Positive Pay prevents fraud by sending an actionable alert when an ACH transaction hits a business’s account when an unknown party attempts to debit or credit an account. Either online or via a mobile device, users can accept or reject unauthorized ACH entries. With visibility into the real-time ACH approval process, business users can easily identify trusted trading partners and automatically populate an ACH filter for future transactions, eliminating the need to maintain ACH blocks and legacy, labor- intensive ACH filters.
ACH Origination Verification detects and alerts ACH originators to net new, suspect payees. Similarly, business users can confirm whether the payee is known and allow the transaction to continue.
With automated ACH Positive Pay and ACH Origination Verification solutions in place, financial institutions no longer need to store paper dispute forms in warehouses, but instead, can charge account holders a small fee for the automated service. Additionally, institutions can cut down on the manual methods requiring the bank or credit union personnel or their originators to set up filters for the business and offsets to business accounts.
Modern treasury management solutions have made it possible for financial institutions to monitor the inbound and outbound movement of funds with greater ease with tools like ACH Positive Pay and ACH Origination Verification to automatically alert businesses of suspicious transactions and stop fraud before it happens. Financial institutions investing in an automated ACH Positive Pay solution will be able to mitigate fraud, drive down costs, generate revenue, and most importantly, protect business accounts against unauthorized transactions, leading to an improved user experience and increased profitability for financial institutions.
Learn more about Alkami’s Check and ACH Positive Pay solutions.
