Protect Your Company from Payment Diversion Scams


Beware the Increase in Scams

Hello again,

This helpful post was written by John Miller, President of Passport Software, about protecting your company from payment diversion scams. We hope you find it useful.

I received an email this morning about an increase in criminals trying to scam people into sending their bill payments for a vendor to a “new bank account or address.” They apparently are able to make their email look very similar to the real company’s emails as they try to deceive you into sending payments to a bogus account or address.

This approach only works until you get a delinquency notice from the real vendor who is most likely unaware of the scammers attempts to divert money to their own accounts. So, when and why do companies or people change banks?

Vendors Rarely Change Banks

Changing banks usually requires a lot of administrative work including ordering new checks, learning the new bank’s portal and getting credentials for those who need various levels of access to banking information. Then there are all the vendors that you have set to pay via automatic debits, or via ACH that need to be converted over to the new bank.

Then there is the relationship with bank management that you have developed over many years. They know you and will help you with issues that crop up from time to time. Usually, a bank has to really upset you to make you go through the effort to choose a new bank, establish relationships, set up accounts, set up access for the people who need one form or another of access, transfer all your existing payments data, etc.

Here is my strong suggestion that is based on the fact that businesses very rarely change their banking relationship. Call someone directly that you personally know at the bank using the phone number that you have on file, not the number in the email telling you where to send money to a new address. Verify with this person that this email is legit and offer to forward it to them so that they may alert other bank customers if there is a large-scale scam going on.

The Importance of Verification

One very good customer of ours actually got a phone call from a person who said “Hi this is Stan at XYZ Company and we were wondering if you could pay your outstanding balance owed to us by wire transfer?” She replied that she could. The caller gave her wire transfer bank and account information, she called her bank and sent the money.

Later she found out that Stan did not work for the vendor company, the bank and account was not her vendor’s and that she had been scammed. So, how did the criminal know so much about her account, and to ask for her and how to fake it all the way?

These criminals are very resourceful at digging up such data and sounding legit. She called the FBI and reported what had happened. They told her that the money was long gone and now untraceable and that they would likely never recover it.

Two characteristics of most entrepreneurs are optimistic and trusting. You pretty much have to be optimistic to start a business, and most of us trust others until proven otherwise. Criminals know this and play on these qualities.

So, be careful and know that trusting someone you do not know personally is risky. Even if they say that they work with a friend or a well-known and trusted company, verify before extending trust or sending money. It is always easier if we learn by the experience of others rather than the hard way. Right?

Audit Trails

Another way to protect your company is to ensure your accounting system is GAAP compliant. Generally accepted accounting principles (GAAP) are a set of accounting standards and rules by the Financial Accounting Standards Board. One important aspect of GAAP-compliant accounting is the creation of audit trails.

Audit trails provide records of transactions within the accounting software that cannot be altered. Journal reports and history files document the flow of money into and out of the company. Audit trails also act to support fraud prevention measures which becomes vital as the company grows, makes more money, and personnel are added.

PBS Accounting is professional level accounting software that helps protect a growing company by offering support for fraud prevention measures and GAAP-compliant practices.

PBS is a flexible modular solution tailored to your unique needs, and you can scale up as your business grows. Our expert consulting, excellent training, and helpful US-based support makes upgrading to PBS Accounting easy:

To learn more about Passport Software’s accounting software call 800-969-7900. Or contact us – we are here to help.

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Great advice, easily explained
for you to grow your business!