Fraud collectively costs small businesses millions per year. In addition to monetary losses, businesses may face payment delays and operational downtime.

Among the various ways scammers target businesses, deposit accounts may be particularly vulnerable to fraud. These accounts have a high volume of transactions, routine refunds, and predictable payment cycles, such as payroll and vendor or bill payments. The resulting mix of activity may make it harder for businesses to spot fraudsters.

Given these vulnerabilities, implementing safeguards to prevent fraud is often more effective than trying to stop it as it happens or recover lost funds later. Below are the common risks small businesses face, along with steps you may take to secure your deposit accounts without slowing down business operations. 

Common Fraud Risks Facing Business Deposit Accounts Today

Nearly four in five businesses were victims of payment fraud attacks or attempts in 2024.[1] Fraud schemes small businesses face include payment redirection fraud, ACH and wire fraud, and check and altered payments fraud. 

Payment Redirection Fraud

In payment redirection fraud, scammers trick people into sending payments to a fake account. They may use a tactic known as business email compromise (BEC) to achieve this. Here, scammers send an email pretending to be someone you know. They may use spoof email addresses, install malware to access your computer's information, or ask for confidential bank information, such as login and password details. 

You may think BEC is easy to spot, but businesses lost $2.77 billion to them in 2024, making it the second-largest loss category among internet crimes. The average cost per small business affected was $129,000 per successful attack.[2]

ACH and Wire Fraud

ACH and Wire Fraud take different forms but may involve last-minute changes to payment instructions or unauthorized electronic transfers. The communications often appear legitimate, making them hard to catch before sending payments. 

Some scammers prefer this type of fraud because wire and ACH payments move money fast, typically within the same business day or even within hours. The short gap between making and receiving payments leaves little time to detect fraudulent activity. Wire transfers are also difficult, if not impossible, to reverse. 

Check Fraud and Altered Payments

Check fraud and altered payments scams cost businesses over $15,000 per year.[2] Scammers may steal a check from the mail and use solvents to alter it. They may erase the payee’s name and the original amount to create a blank check that they may fill out or make copies of. 

Why “More Controls” May Not Be the Answer

The answer to business fraud prevention isn’t always adding strict manual approval steps to financial transactions, such as requiring:

  • The owner or CEO to approve all payments
  • Email or verbal confirmation for most payments, or re-checking vendor payment details every time
  • Having only one trusted employee in charge of all payment activity
  • A daily line-by-line review of all bank transactions
  • Rigid payment approval timelines with no flexibility for urgent payments

These approaches may help reduce small business fraud, but they may also delay payments, create bottlenecks, and encourage workarounds that increase risk. The net result may be a slowdown in your operations without a significant increase in security.  

5 Fraud Controls That May Protect Cash Without Creating Friction

Instead of relying solely on adding broad manual controls to your financial systems, consider incorporating a few safeguards that align with the level of risk you’re comfortable with. Look to adapt tools in ways that don’t create internal bottlenecks and friction that slows down your daily operations. Some fraud mitigation tools to consider include:

1. Positive Pay With Payee Match

Positive Pay may help you catch check fraud before funds are taken from your account by verifying that the names on checks match the intended payee. 

When issuing a check, you provide the bank with key details, such as the check number, date, payee name, and amount. When someone gives the check to a bank to be cashed, your bank verifies the check’s information against what you provided. 

If everything matches, the check is approved. If not, the bank flags the check for your review. You then decide whether or not to authorize the check. 

Ideas for Making This Fraud Prevention Tool Work for Your Business

The process does involve some manual review, but less than approving every check before it's cashed. To prevent this control from slowing your business, you may want to assign someone to review flagged checks daily and an alternate person if the primary approver isn’t available. 

2. ACH Blocks and Filters

Another valuable fraud prevention tool for your business may be ACH blocks and filters. Deposit accounts with ACH blocks reject all ACH debits by default, while ACH filters only allow transactions from an approved list of originators, such as payroll providers and government agencies. 

Transactions from originators not on the list are either blocked or flagged for review before they are allowed to proceed. 

Ideas for Making This Fraud Prevention Tool Work for Your Business

ACH filters may be the more practical solution, depending on your business and volume of ACH requests. You may be able to keep this control from slowing down your business by:

  • Keeping the approved list of originators updated as vendors and processors change
  • Set alerts for flagged transactions so they’re reviewed faster
  • Have an assigned person monitor flagged or blocked transactions for authenticity

3. Dual Approvals

Dual approvals require two people to approve transactions. The extra approval helps reduce fraud because no single person may both create and approve an ACH or wire payment. If one person initiates a payment, only the second person may release the funds. The dual approval process may be effective in helping to prevent:

  • Internal fraud
  • Business email compromise losses
  • Human errors made under time pressure, such as when needing to make an authentic urgent payment
  • You may also require dual approvals in other situations, such as payments:
  • Above a specific dollar amount
  • Made to first-time payees or those recently updated
  • That aren’t routine

Ideas for Making This Fraud Prevention Tool Work for Your Business

It may be a good idea to review your business’s cash flow and account transactions to define what thresholds make sense for dual approvals. You may also want to clearly define who may create payments and who may approve them. 

4. Least-Privilege Entitlements

Your business bank account may allow you to assign permissions to users based on their roles and responsibilities. For example, certain employees may be able to view the account activity and download reports, while others may be able to update payees, release funds, or approve high-risk transactions. 

Ideas for Making This Fraud Prevention Tool Work for Your Business

Evolving workplaces mean it’s important to periodically review which employees have access to your accounts. Every quarter, you may want to:

  • Remove users who no longer work for you
  • Adjust user access to reflect an employee’s new position
  • Remove permissions that an employee no longer needs

5. Real-Time Alerts

Real-time alerts flag potential issues and unusual activity as they happen. For some businesses, they’re a helpful early warning system that may protect your funds without slowing down routine business banking activity. 

Your bank may already send you these alerts, but you may also be able to adjust the types of alerts you receive. Your options may include alerts for:

  • Low balances
  • Large debit and credit transactions
  • First-time payees
  • ACH returns
  • Login or authentication changes 

Ideas for Making This Fraud Prevention Tool Work for Your Business

You may want to have alerts routed to at least two people to help ensure your business responds promptly. Also consider establishing a plan for after-hours alerts, such as deciding which types may wait until the next business day for follow-up and which require immediate attention.

Protecting Liquidity Without Slowing Momentum

Fraud prevention tools are only effective when used. You may check which ones your bank offers and decide which make the most sense for your business based on your risk tolerance, transaction volume, and most common transactions. Then consider how you may adapt the tools to align with your business practices.

With the right mix of controls, you may be able to protect your business's cash flow and safety nets without slowing down your daily operations. If you’d like to review which safeguards may best help your business, contact a PNC small business banker to start the conversation.