How to Protect Your Saas Business from Bank Account Fraud

SaaS businesses are constantly exposed to different security threats. Cybercriminals are always evolving as time passes, learning methods to explore vulnerabilities in the security systems of SaaS businesses. Bank account fraud is one of the threats SaaS businesses face.

Bank account fraud describes any form of fraudulent transaction with a bank account. It includes stealing a business bank account, opening a bank account with a stolen identity, or getting businesses to transfer money against their will.

There are different types of bank account fraud being used against SaaS businesses. Some include bank account takeovers, money mules, loan fraud, phishing scams, new account fraud, wire fraud, etc. Organizations need to be updated and stay ahead of this growing threat. 

There’s no absolute way to protect your business from these scammers. However, you can take steps to effectively minimize the possibility of falling victim to bank account fraud. 

How to Protect your SAAS Businesses Bank Account?

As companies seek to improve their security, cybercriminals and scammers are also creating new ways to defraud businesses. Here are some popular bank account frauds perpetrated by these criminals. 

• Account takeover fraud (ATO)

Account Takeover Fraud is a form of bank fraud where a cybercriminal gains control of their victim’s account(s). This gives the cybercriminal complete access to certain private information, including the victim’s PIN. 

It also creates an opportunity for them to make administrative changes in the account like changing the statement mailing address, changing passwords and usernames also gradually or immediately draining the account of its funds. ATO fraudsters remove funds from accounts by direct debit, payments, or transfers being set up for fraudulent transactions. 

Since bank transfers aren’t reversible, fixing the damages caused by ATO fraudsters is extremely challenging. Businesses are exposed to account takeover frauds via phishing, social engineering, bought credentials, and IT security vulnerabilities. 

• 419 fraud

Originating from west Africa, 419 is a form of advance fee fraud where businesses receive emails promising a significant percentage of a tremendous amount of money in return for allowing funds to pass through the victim’s bank account.

• New account fraud

This fraud combines synthetic identity, user impersonation, and configuration spoofing. Also known as artificial identity creation, cyber criminals collect information about real individuals and then manipulate their identities with false data to create an entirely new identity assigned to no real-life person. The fraudsters use sophisticated technology to workaround KYC and IDV checks (via deep fakes and photoshopped documents). 

• Wire fraud

Online fraud based on promises is known as wire fraud. In this strategy, the victim is coerced into sending the fraudster money by being threatened with blackmail or, in some other way, persuading them to do so. The primary means of communication include phone calls, faxes, emails, texts, and social media platforms.

• Authorized push payment fraud (APP)

Real-time payment schemes made authorized push payment fraud attractive to cyber criminals. APP fraud happens when fraudsters manipulate customers or staff of a business to send money under pretenses to a bank account owned by the fraudster. 

This covers ‘Malicious payee’ type fraud, such as investment and purchase scams, and ‘Malicious redirection’ type fraud, such as impersonation and invoice redirection scams.

Losses due to authorized push payment scams were £479 million in 2020. This was split between personal (£387.8 million) and non-personal or business (£91.3 million).

In total there were 149,946 cases. Of this total, 143,259 cases were on personal accounts, and 6,687 were on non-personal accounts.

• Money mules

Money mules are fraudsters’ accomplices. They usually carry out a part of the illegal activity by creating new bank accounts using their real names and other relevant details. This makes it quite difficult to flag fraudsters, as they pass all the KYC and AML checks.

COVID-19 had a significant impact on the recent increase in bank account fraud. The fact that most employees have been working from home, spending longer online, and making sensitive transactions without proper supervision, may have made businesses more susceptible to these scams. Intelligence suggests that businesses of all sizes fall prey to bank account fraud.

Meanwhile, over two-thirds of UK adults (72 percent) used online banking in 2019, and this proportion increased further in 2020 due to the pandemic. As the use of the internet and online banking increases, so make attempts by criminals to steal money from businesses through these channels.

How to protect your SaaS business from bank account fraud

As a business, you are constantly exposed to various threats from physical, cybersecurity, and bank account fraud. It’s not just your business’s bank accounts susceptible to these fraudsters. The information you collect from your customers can also expose them to these cyber criminals. 

It becomes your business to adequately protect both your business’s bank accounts and sensitive customer data from third parties. There’s no absolute way to protect your business. 

However, SEON suggests different bank account frauds can be blocked by taking some security steps to protect your business. The list below describes some steps to take to protect your business from fraudsters adequately. 

• Employee education

Due to the pandemic, many businesses had to revert to being entirely or partially remote. This has made it easy for cybercriminals to access sensitive information.  A business’s employees are its first line of defense. Business owners and managers should implement best practices for remote work security and educate their employees on how fraudsters operate. 

• Create dedicated bank accounts for your business 

Some business owners mix personal and business funds in one account. This is very wrong as it can expose your business to fraudsters’ attacks. For example, you could overlook fraudulent transactions because you mistake them for personal ones. 

Create a unique account for all business proceedings. Separating your accounts makes it easier to track your business expenses and report deductions on your tax return. The law also mandates it in some countries. 

• Review every transaction 

The best way to prevent bank account fraud is to monitor every account transaction closely. When you’re constantly updated about the account balance and aware of each transaction, it becomes easy to spot the fraudulent ones (e.g., suspicious high amounts of returns, cash register discrepancies, vendor chargebacks, etc.) and block them immediately. 

Banks usually have anti-theft security measures in place, but it’s also essential that you proactively monitor your business account as one can never be too safe. 

• React immediately to any suspicious activity 

Proactively observe the business bank accounts and react quickly to weird activities like spoofed attachments, malicious emails, viral pop-ups, etc. Report such actions to your bank and eliminate the affected system immediately. 

• Install up-to-date firewalls and antivirus to protect computer systems

Every employee’s strategy within the organization must have updated security tools like firewalls and antivirus. This can go a long way in blocking phishing schemes that attempt to steal confidential information. Also, have security protocols like logins and passwords to make it harder for these scammers to infiltrate your business. 

• Insure your business 

No business is 100% immune to bank account fraud. No matter how strict your security protocols are, you may still fall victim to fraud. It’s okay to plan and ensure your SaaS business against losses you may incur from bank account fraud. Also, liaise with your financial institution and find out what they can do to help should your business account be compromised. 

• Communicate with your clients regularly. 

As a SaaS business, most dealings are online. It is easy for a fraudster to impersonate you and communicate with clients. Hence, they can collect sensitive information from unsuspecting clients. Should this happen, it won’t paint a good picture of your business to clients and may scare potential clients away.

To prevent this, regularly update your clients about your business through official channels. Educate them about the tricks of cyber criminals and how to avoid falling for their scams. Tell them about the kind of information you will/will not ask of them. 

When it comes to the collection of sensitive information, use multi-factor authentication as much as possible. Also, you can utilize anti-phishing codes. This allows clients to generate their code, delivered through regular channels like text messages or emails. 

Conclusion 

You must protect your organization against bank account fraud as a SaaS business owner. A successful scam against your business not only causes financial damage but may tarnish its reputation. Follow the steps in this article to effectively protect your business against bank account fraud.