Protecting Your Business With Effective Fraud Prevention Strategies: A Webinar Discussion

Financial fraud is rising, which creates a significant threat to businesses. In part, that’s because while technology has made our lives easier, it has also created new openings for cybercriminals to access.

During a Small Business University Online webinar hosted by Western Alliance Bank, two of our experts delved into the complexities of fraud. They discussed common types of fraud, best practices for prevention and the role of banker relationships in safeguarding small businesses. One message was clear: Staying informed and implementing fraud prevention strategies can help mitigate risks for better protection.

Understanding the Risks

Many small businesses have gradually shifted toward digital transactions for convenience, with less cash exchanged. But in doing so, cyberattacks on email accounts and electronic transactions are creating new opportunities for fraud. Some of the most prevalent avenues used to commit fraud include:

• Check fraud: This classic scheme involves washed or altered checks. New technology and online channels for sharing stolen checks make it even more dangerous today, affecting 65% of businesses, according to a 2024 study from the Association for Financial Professionals.
• Phishing or email compromise: Fraudsters impersonate legitimate businesses to trick others into transferring funds or gain access to email accounts to divert payments.
• Wire fraud: Criminals use wire transfers to initiate unauthorized fund transfers.
• Account takeover: Hackers gain access to business accounts to steal funds or commit other fraudulent activities.

Any of these methods can be amplified with the use of artificial intelligence (AI), which can generate thousands of fake invoices and even help criminals crack passwords.

Implementing Fraud Prevention Strategies

As the risk increases, innovative solutions are keeping pace — and your bank can be a resource to help. Here are eight strategies to combat fraud and protect your business:

1. Use digital payment methods: Whenever possible, opt for the accuracy of electronic payments like ACH transfers and credit card transactions. These methods offer greater security and faster processing times. 
2. Explore check verification processes: Implement check verification processes, such as Check Positive Pay, a secure, cost-effective way to detect potentially fraudulent checks and minimize risk. Checks are presented to you for review and only approved checks get processed, which safeguards against check fraud.
3. Monitor accounts closely: Regularly review bank statements and credit card bills to identify any unusual activity. Report any suspicious transactions promptly to your bank.
4. Use strong passwords: Create and regularly update complex passwords for your online accounts, and never leave them posted near your computer for others to see.
5. Confirm wire transfers: Verify wire transfer instructions through multiple channels, including phone calls, to mitigate the risk of fraudulent requests. When appropriate, consider other payment methods, such as credit cards and ACH, to delay payment in case of attempted fraud.
6. Enable two-factor authentication: Add an extra layer of security to your accounts by enabling Out-of-Band Authentication, which requires a second form of verification, such as a code sent to your phone. The extra security step is worth the extra time.
7. Educate your employees: Train your staff   to recognize suspicious emails and links — and to be cautious about sharing sensitive financial information. Western Alliance Bank offers employee fraud training at no cost to you.
8. Confirm email requests for payment: Always confirm that an email is from the right sender. When in doubt, pick up the phone and call — especially when the sender asks for payment with tremendous urgency.

Building Bank Relationships

While fraud prevention strategies are important, a strong banker-client relationship can also serve as an extra layer of protection against potential fraud. When you have direct access to a team of banking experts, they can help identify suspicious activity so that you can address urgent needs.

Choosing a bank that understands your business and makes a trusted advisor available by phone for timely support and guidance, ensures that you have expert help when it matters most. In partnering with them, and leveraging their fraud prevention expertise, you can explore customized tools and solutions tailored to your business, with clear explanations of the pros, cons and potential return on investment of each. Once you have these in place, open communication along the way is key. Regularly discuss your concerns and questions with your banker, and if you suspect a fraud attempt, that’s an important time to get in touch. They’ve seen it all, they can help – and they’re just a phone call away.

Watching the Webinar Video

To hear directly from expert bankers who help guide small businesses on this issue, please watch the full webinar. For the best tools to protect your business, please reach out to our dedicated banking team.