Common Bank Fraud TacticsStolen Cards & Forged Checks Are Just the Start
What Bank Fraud Tactics Do Scammers Use to Carry Out Attacks?
What comes to mind when you envision modern-day bank fraud? Maybe it’s a criminal stealing physical credit cards from unsuspecting cardholders, or forging bad checks that eventually bounce.
While bank fraud can encompass those tactics, the reality is that tactics in the digital age are often more subtle and varied. Also, they’re often aimed at merchants, rather than individuals.
In this section, we’ll explore a few common bank fraud tactics that scammers employ against eCommerce merchants so you can understand the threats you’re up against.
Bank Fraud
It’s easy to understand why fraudsters often target financial institutions. After all, banks are where money is deposited, stored, and withdrawn. What’s less well-understood, though, is how bank fraud occurs, and how often it happens.
Common Bank Fraud Tactics
Bank fraud often involves sophisticated tactics aimed at exploiting vulnerabilities in financial institutions’ and merchants’ defenses. These include:
Intercepting Payment Instructions
Fraudsters infiltrate company email systems to monitor for invoices or payment discussions. They then intercept these communications and bank details to redirect funds to their own accounts. This often goes unnoticed until the legitimate recipient follows up on a missed payment.
Redirecting Customer Payments
In this variation, fraudsters pose as your company and send fake invoices to your customers with updated payment information. Your customers, believing they are paying you, send money directly to the criminals, resulting in lost revenue and damaged customer relationships.
Manipulating Payments Meant for Vendors
Fraudsters may contact your accounts payable department, pose as a legitimate vendor, and request a change to their bank account information on file. The next time you pay that vendor, the money goes to the fraudster instead.
Fund Diversion
Fraudsters purchase stolen credentials from the dark web, use malware, or send phishing emails to get your login information. They can then change the settlement bank account details to one they control. The funds from your daily sales are then diverted, and it may be days or even weeks before the theft is discovered.
Exploiting Batch Processing
The ACH network processes transactions in batches, which can create a delay between when a transaction is initiated and when it is settled. Fraudsters exploit this window to pull funds from compromised accounts, since they have some time before the transaction is flagged.
Manipulating Returns & Reversals
Fraudsters may manipulate ACH return codes to make a fraudulent transaction appear as a legitimate reversal or refund. This complicates the reconciliation process and can mask their activity for longer periods.
Manipulating Integration Points
Another form of ACH origination fraud, scammers can identify points where your systems connect to the ACH network as weak spots. Fraudsters can exploit vulnerabilities in these integration points to inject unauthorized ACH files or alter legitimate ones.
Scammers may target less-secure, non-financial corporate accounts first, knowing that employees often reuse passwords across multiple systems.
