Frauds Dangers Connected with ACH and Wire Transfer

Every business bear the risk of payment frauds, due to nature of business or some other reasons. Almost three quarters of respondents were targets of attempted or actual fraud, while 42 percent reported increased fraud attempts. Fraudulent checks were used most often, followed by wire transfers, cards and ACH.

With high-tech global technology in payment industry it made check acceptance and clearance cheap and easy, but also it made easy to commit fraud activities. Increased in the use of automated transaction coms with an increased in fraudulent activities. The FBI saw a 38 percent increase in wire transfer fraud in 2011 alone. The 2014 Association for Financial Professionals Payments Fraud and Control Survey reported that payment fraud from ACH debits in 2013 affected 22 percent of responding organizations, while payment fraud from ACH credits in 2013 affected 9 percent. Payments from wire transfers in 2013 affected 14 percent of respondents, up from 11 percent in 2012.

ACH and wire transfer appears very similar with few differences. Wire transfer move money between financial institutions. With ACH Transaction information is sent in a batch to an automated clearing house, which clear the ACH payments and sends to bank and the clearing house acts as a middle man takes long time up to 3 business days to clear the payments. 

Being popularity of these types of payments there is greater accessibility of fraudulent activities. The primary targets are small- to medium-sized banks, businesses, schools and other organizations. These targets often rely on traditional security systems and applications, therefore increasing their risk.