Organizations must be doing something good: Payment fraud activity is declining

Results from an Association for Financial Professionals (AFP) survey are encouraging, as 71% of organizations report having been victims of payments fraud activity in 2021, lower than the 81% reported in 2019 and the lowest percentage recorded since 2014.

Of those respondents that reported an increase in payments fraud at their organizations, 47% do not believe that remote work contributed to the increase. However, 32% believe remote working did play a role in the uptick of payments fraud at their companies.

Check fraud activity is unchanged from the prior year at 66%, while the share of respondents reporting payments fraud via ACH debits increased four percentage points from last year to 37%. Checks and ACH debits are the most susceptible to payments fraud, while wire fraud activity continued its steady decline from 48% in 2017 to 32% in 2021.

Thwarting payments fraud activity

An encouraging result is the notable decrease in business email compromise (BEC) over the previous year. Sixty-eight percent of organizations were targeted by email scams in 2021; an eight-percentage point decrease over the previous year. Wires and ACH credits are both key targets for email scams, with each of these payment methods targeted at 41% of organizations in 2021.

“While payments fraud remains a tremendous challenge for organizations, the decreases we’re seeing in nearly every area are a clear signal of the efforts of our colleagues and business leaders to curb fraudulent payments activity from criminal attempts,” said Jim Kaitz, president and CEO of AFP. “That said, we must remain vigilant in our pursuit of education, training and innovation in order to remain one step ahead of our sophisticated adversaries.”

“It’s encouraging to see the positive outcome of so many companies continuing to proactively combat payments fraud in their organizations,” said Sue Dean, head of payments solutions for J.P. Morgan’s Commercial Banking business. “While the increase in shifting to digital payments and processes over the last two years can present more opportunities for fraud attacks, it’s clear that we’re moving in the right direction together.”

Other highlights

• Two-thirds of organizations are validating payment beneficiary information, either through their vendor/bank (36%) or by using an external service (30%).
• Accounts payable (AP) departments continue to be the department most susceptible to BEC, with 58% of survey respondents indicating their departments were compromised through email scams.