Summary:
In 2022, 65% of organizations were targets of payment fraud — and those attacks are becoming more and more sophisticated. In this short video, PNC Small Business Banking Treasury Management Executive Dave Shorten reviews the impact of fraud, the varied approaches fraudsters take, and how PNC’s resources can help protect your company, customers and employees.
Speaker Bio:
Dave Shorten is the Small Business Banking Treasury Management Executive responsible for the overall management and leadership of Business Banking Treasury Management and leading all sales channels.
Prior positions include General Manager for PNC Merchant Services. As General Manager, Shorten was responsible for the overall management and leadership of the PNC Merchant Services and leading all sales channels. Prior to this role Shorten was Vice President of Sales for PNC Merchant Services working for First Data. Other positions at First Data included over 10 years with Western Union Financial Services. Shorten started his career with Western Union as a field sales representative in New Jersey. He was a Key Account Manager for the Northwest United States focusing on sales of mid market accounts. Shorten also served as the Sales and Marketing Manager for the Northwest United States. He also was a Regional Planning Manager, Western United States, focusing on the overall strategic direction of the western part of the United States. Shorten also served as a National Account Manager, National Sales Manager and Director of National Sales where the focus was on selling into new large national accounts and servicing existing clients.
Shorten's professional affiliations include membership in the Association of Financial Professionals and the Consumer Banking Association. He was a previous member of the Discover Acquiring Advisory Counsel. He holds a Masters Degree in Marketing from City University, Bellevue, WA and holds an undergraduate degree from Temple University, Philadelphia, PA; he has also completed the Graduate School of Retail Bank Management through the Consumer Banking Association.
For more information on protecting your business from the growing threat of fraud you can also visit PNC Fraud Mitigation Solutions.
Webcast Transcript:
Dave Shorten: What every small business needs to know about fraud. Hello, I'm Dave Shorten, Head of Treasury Management for Small Business Banking at PNC Bank. Annual statistics have shown small businesses have ranked highest in fraud frequency year after year. Fraud creates a serious cost for small businesses today.
The Association of Certified Fraud Examiners reports that U. S. businesses will lose an average of 5 percent of their gross revenues to fraud. The biggest contributing factor is a lack of internal control. Smaller businesses are more likely to have fewer fraud prevention restrictions, control, and processes in place.
The 2023 AFP Payment, Fraud and Control Survey reports 65 percent of organizations were victims of payment fraud attacks and or attempts in 2022. Checks continue to be the payment method most vulnerable to fraud. With 63 percent of businesses reporting their organizations face fraud activity based on check usage.
As ACH payments have become one of the primary means of non-cash payments over the last 20 years, these popular electronic money transfers create potential risk as well. There are various ACH fraud schemes and it has been a growing trend. Possibly because it's fairly easy to accomplish and can go undetected.
30 percent of businesses reported a bad actor attempting to manipulate payments for both ACH debit and credit fraud. Fraud can begin from within or outside a business from employees, customers, or suppliers. 58 percent of financial professionals reported that their business experienced payments fraud as a result of actions by an individual outside of their organization.
Vendor fraud schemes are one of the major challenges businesses face today. 29 percent of small businesses report an attempt to scam their accounts payable department into paying a vendor or multiple vendors for money not rightfully earned. Banking fraud is an ever-present issue for businesses of all sizes.
Nineteen percent of business owners experience a hacker gaining access to bank accounts through malware, fraudulent emails, or other means. These fraudsters would try to make an authorized purchase or transfer before account credentials were changed. Business fraud can occur once and cost a company millions or take place over years with the same result.
According to the AFP 2023 report, 51 percent indicated that after a successful fraud attempt, the organization was unable to recover funds lost. While other business owners reported being able to recover some losses, almost two thirds of businesses recover 25 percent or less, and only one fourth recover more than 75 percent.
There are steps business owners can take to prevent fraud. Allow employees to report suspicious activity and discourage would be fraudsters. Consider the last time you revised your company internal controls and think about updating them based on the latest scams and available technology. It is so important to discuss fraud prevention with everyone in your business.
Your office or wherever your small business operates. Every employee must know the risks and what to watch for. Preventing payment and online small business fraud depends on staying informed about potential threats and watching for them. Actively engage in the fraud discussion today, keeping employees aware and trained is critical.
PNC offers powerful, secure, and reliable banking solutions for small businesses just like yours. You can easily manage your day to day financial activity online, keeping you more informed and allow you to mitigate fraudulent activity. For more information on small business fraud prevention and protection, please visit pnc.com/insights/smallbusiness or contact your PNC small business relationship banker today. Thank you.
