Situation: A company was contacted by their vendor regarding the non-payment of two invoices. The company showed the invoices as being paid via a check in the amount of $20,840 which was mailed to the vendor and was paid through their commercial checking account with their bank. When the company researched the paid check, they found the payee on the check had been changed to an individual’s name.
Potential loss: The potential loss here is $20,840. A company should consider the cost of their time to contact law enforcement, close the compromised account, open a new account, contact existing vendors with automated payments of new account, and review internal procedures.
Defense: One tool companies can use to prevent or reduce the risk of such fraud is Payee Positive Pay service for issued checks and an online banking daily review of all activity on the account. Companies can also mitigate risks through employee education, and the practice of using E-statements so paper statements are not sent via USPS.