Bank Fraud Awareness

Bank Fraud Awareness: How to Protect Yourself and Your Business

Bank fraud targeting businesses is becoming more sophisticated every year. Criminals use various methods to trick companies into transferring funds or exposing sensitive data. Small businesses and larger organizations alike are at risk, and the consequences can range from financial loss to reputational damage.
 
First State Bank is committed to helping businesses stay informed. To learn more about safeguarding your company's accounts with us, call 940-665-1711 or send us a message.
 
Understanding Bank Fraud in a Business Context 
 
Bank fraud is the unlawful use of deception to gain access to a financial institution's or its customers' money or confidential information. While consumer accounts may be targeted, business accounts attract larger schemes because they typically involve higher transaction volumes and larger sums of money.
 
Unlike simple phishing emails, such as those often sent to personal email accounts, fraud against businesses can be much more complicated and well-orchestrated. It usually involves extensive research and planning by the criminal.
 
Fraudsters study organizational structures, learn vendor relationships, and even impersonate employees to create convincing scenarios. This means the responsibility for bank fraud prevention extends beyond the accounting department to include leadership, IT, and every employee interacting with payments or sensitive data.
 
Bank Fraud: Common Threats Facing Businesses Today
 
Banking fraud can take many forms, but specific threats are more common for business owners. By improving their bank fraud awareness, companies can improve their readiness and how they respond.
 
The following are some examples of ways a fraudster might target a business:
 
Business Email Compromise (BEC)
 
BEC occurs when a fraudster impersonates an executive or vendor using email. The attacker may ask an employee to wire funds, change payment details, or send confidential information. 
 
The emails often use domains spelled slightly differently from the real ones, and the content might have a writing style similar to what the recipient expects from a trusted source. These messages are designed to appear authentic and create a sense of urgency, which can pressure employees into acting quickly without verifying the request.
 
Caller ID Spoofing
 
Using technology like Voice over IP (VoIP), criminals disguise their phone numbers to appear as if the call is coming from a trusted source, such as a bank or government agency. The caller often pressures the recipient to share bank login credentials, confirm account information, or authorize payments quickly.
 
Check, Wire, or ACH Fraud 
 
Fraudsters may alter checks or intercept electronic transfers, including wire and ACH instructions. Since businesses handle these payments often, they might not detect unusual activity until after it has occurred. 
 
Cybersecurity Weaknesses 
 

Vulnerabilities in technology and day-to-day practices give criminals entry points into a business. These may include weak or reused passwords, outdated systems, and staff using personal devices to access sensitive accounts. Once an attacker gains entry, they can move through the network to reach banking platforms and client information.

Identity Theft 
 
Identity theft in a business setting often involves criminals collecting personal or corporate information and using it to pose as someone else. They may obtain data through methods like phishing emails and data breaches. With enough details, such as tax identification numbers and account information, fraudsters can create convincing documents or digital profiles.

This impersonation allows them to do a lot of illegal activities that put businesses at risk, such as:
 
  • Open fraudulent accounts in the company's name 
  • Reroute legitimate payments to false destinations
  • Send fake invoices to clients or vendors to divert funds
Banking Fraud Warning Signs to Watch For
 

Fraudulent activity rarely looks obvious. Instead, it often mimics the tone and format of standard business practices. Training employees in bank fraud awareness and teaching them to question unusual requests is a practical first step in bank fraud prevention.

Be alert to these warning signs:
 
  • Payment requests that are urgent or inconsistent with past transactions
  • Emails with minor errors in spelling, grammar, or sender addresses
  • Calls requesting security codes, login credentials, or account information
  • Vendors or partners changing payment details without prior confirmation
  • Financial instructions that skip or override your established approval process
Even small details can be important. A missing phone extension or a payment request outside normal business hours may indicate that something is wrong. 
 
How to Strengthen Your Fraud Defenses
 

Protecting your business against fraud requires a strategy that includes internal processes, technology, employee awareness, and strong communication with your bank. Here's how to fortify your company's defenses against fraudsters and cybercriminals: 

Strengthen Internal Processes
 

Fraudsters are less likely to succeed when approvals and documentation are requested for high-value or unusual transactions.

  • Require two levels of approval for all wires, ACH transfers, or changes to vendor banking details.
  • Set limits on who can authorize financial transactions and who can request them.
  • Review and reconcile bank accounts regularly to catch unauthorized activity quickly.
  • Keep updated vendor records and confirm any payment changes using trusted contact information.
Strong internal controls help create accountability and reduce opportunities for bank fraud scams to slip through unnoticed.
 
Prioritize Cybersecurity
 
Criminals often exploit weak security measures, while businesses that maintain secure systems create fewer openings for attack.
 
  • Enable multi-factor authentication for all online banking and financial platforms.
  • Keep computers, servers, and mobile devices updated with current software and security patches.
  • Use unique, complex passwords and avoid reusing them across accounts.
  • Limit the use of public or shared Wi-Fi networks when handling sensitive information.
  • Provide employees with cybersecurity training, including how to spot phishing attempts and suspicious attachments.

A well-designed technology environment reduces risk and demonstrates to employees and partners that security is a priority.

Build a Culture of Fraud Awareness

Policies and technology are valuable, but people remain the most common target of fraud and the weakest spot in a cybersecurity strategy. 

A culture of awareness helps employees recognize fraud attempts and feel empowered to act when something looks suspicious.

  • Incorporate fraud awareness training into onboarding and ongoing staff education.
  • Encourage employees to speak up if they see unusual requests or activity.
  • Run periodic exercises to test how employees respond to suspicious communications.
When fraud prevention is treated as a shared responsibility, the likelihood of catching a suspicious request increases. 

Work With Your Bank

Your bank can serve as a valuable partner in protecting your accounts. Knowing how to reach the right people when something seems unusual can help you respond quickly to potential threats.

  • Establish a primary contact at the bank for reporting suspicious activity.
  • Ask about security tools such as transaction alerts, payment filters, or positive pay services.
  • Review secure wire and ACH transfer options, especially if your business makes frequent electronic payments.
  • Discuss fraud monitoring solutions that may be available for business accounts.
Working closely with your bank builds familiarity and create another line of defense for your business. 
 
What to Do If You Suspect Fraud   
 

Cybercriminals can be persistent, and even with the strongest bank fraud prevention efforts, attempts may still occur. Quick action can reduce losses and help limit damage to your business. Knowing the proper steps to take can make your response more effective.

If you suspect fraud, take the following actions: 
 
  • Contact your bank immediately to review accounts and block unauthorized transactions.
  • Alert your IT team or technology provider so they can secure systems and investigate breaches.
  • Report bank fraud scams to local law enforcement or appropriate regulatory agencies. 
  • Notify vendors, clients, or employees who may be affected.
  • Document the incident, including how it happened and what changes will be made to reduce risk in the future.

Responding quickly not only helps resolve the immediate issue but also serves an additional layer of bank fraud protection, strengthening your organization against future attempts.

Explore More Helpful Resources from First State Bank

Fraud is an evolving threat that affects businesses of every size and industry. While no company is completely immune, taking proactive steps greatly reduces the risk of loss. Through consistent employee training, reliable internal processes, and strong bank fraud protection practices, businesses can build resilience against fraud attempts.

First State Bank supports community businesses with resources and guidance. If you believe you believe you've been a victim of bank fraud scams or wish to learn how we can work with you to strengthen your fraud prevention strategy, reach out to us. Call 940-665-1711 or message us today.