May 8, 2023

Avoiding Fraud and Mitigating Risk For Businesses

Avoiding Fraud and Mitigating Risk For Businesses

Fraud is out there. Avoid it with the right tools.
Fraud is out there. Avoid it with the right tools.
Fraud is out there. Avoid it with the right tools.

Initially banks, buyers and sellers are drawn to LiquidTrust because the services we offer are simple to integrate and open up the possibility of making payments with ease to more than 150 different countries around the globe. What makes LiquidTrust indispensable for the many loyal businesses who use it are the important ways that these same services help you avoid fraud and mitigate risk.

The 2023 AFP Payments Fraud And Control Survey Report released by the Association for Financial Professionals made the real risk of payment fraud quite clear.

J.P. Morgan underwrote the 2023 AFP Payments Fraud and Control Survey, which is now in its 15th year. More than 450 treasury practitioners participated in the survey, forming the basis of this report, and making it one of the largest and most instructive data points collected on this topic. Their report impartially showed that 65% of the organizations responding were victims of payments fraud attacks or attempts in 2022.

Even more telling, is the fact that according to their findings, 92% of small businesses surveyed are concerned with payment fraud. When nine out of ten of your customers are concerned about something, it deserves a high priority response, especially since payment fraud SMB concerns have unfortunately been validated by the facts far too often.

How Important Is Fraud and Risk Mitigation to Business Owners?

More than 42% of the small business owners surveyed stated they have already dealt with actual payments fraud over the last 5 years, and among them they enumerated an average loss of $54,104 over that same period.

When looking to report payments fraud, nearly 80% of organizations are most likely to seek assistance from their banking partners for guidance regarding the steps to take to minimize the impact of the fraud.

Modern Fraud By the Numbers

Checks continue to be the payment method most vulnerable to fraud, with 63% of respondents reporting their organizations faced fraud activity via checks. Additionally, 45% of respondents (the highest in the past five years) cited wires as a top payment method used during BEC attempts.

Simultaneously, instances of fraud via commercial card increased by 10 percentage points, and instances of fraud via ACH credits and virtual cards increased by 6 percentage points each.

Preventing Fraud Is Far More Beneficial Than Recovering From It

Recovering from fraud is a time and resource consuming slog for small business owners whose focus is required in so many other aspects of their day to day operations. By preventing fraud, the bank not only protects their client’s assets, it also reduces the headaches and resources that would be needed to recover if a fraudulent attack occurs and is successful in part or completely.

Of those who were victims of payments fraud in 2022, more than one-fourth of organizations (27%) were able to successfully recover at least 75% of funds lost, but that doesn’t account for the fact that any amount recovered still required many hours of time lost to the recovery process which could have easily been prevented by using an escrow-like intermediary like LiquidTrust instead.

From the bank’s point of view the lingering loss of goodwill among clients who suffer from fraud, whether the client eventually recovers their funds or not, is reason enough to take pause and seek a better solution than requiring customers to pursue recovery of funds they never should have lost in the first place. Especially when you also include the 44% of customers who were unsuccessful in recouping any of the stolen funds from cases where the fraud may have been prevented.

Put plainly, having LiquidTrust eliminate a $54,000 problem for nine out of ten of your small business customers is an important value-add in the mind of business owners based on their survey responses.

Perhaps even more importantly, failing to take action in a way that is clear and easy for clients to recognize would suggest a level of apathy on a subject that many clients clearly consider one of the most important things their banking institution can handle for them.

To learn more about the simple and affordable international payment escrow solution LiquidTrust provides, contact us today and allow us to help you and your clients to protect their assets at every step along the path from initial agreement to final payment.