Payment fraud is one of thebiggest risk management challenges facing corporate treasurymanagers, and it's one that businesses must battle on two fronts.Although media attention tends to focus on the emergence oftechnically sophisticated online banking scams, criminals continueto target paper checks for fraud. Both crimes should be front andcenter on a treasurer's radar.

According to the “2013 AFP Payments Fraud and Control Survey”conducted by the Association for Financial Professionals (AFP), 61percent of organizations experienced attempted or actual paymentfraud in 2012. Checks continued to be the dominant payment formtargeted by fraudsters, with 87 percent of affected organizationsreporting check fraud attempts. Check fraud has been around for along time, but in recent years criminals have become moreproficient at it. The advent of inexpensive desktop publishingequipment has enabled them to create incredibly authentic-lookingcounterfeit checks. In its most common form, counterfeitinginvolves creation of fraudulent checks using an organization'sMICR-line data. Criminals also commonly alter the amount or payeename on checks that have actually been issued, or they steal orcounterfeit employee paychecks.

Meanwhile, a much smaller proportion of respondents to the AFPsurvey said they faced attempts at commercial purchasing card fraud(29 percent), Automated Clearing House (ACH), debit fraud (27percent), or wire transfer fraud (11 percent), although thepotential losses are greater via these electronic methods. Thetypical financial loss among companies that suffered payment fraudin 2012 was $20,300, according to the AFP.

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