Monday, April 4, 2011

Corporate Account Takeover Fraud Remains a Serious Problem

By Michael Scheibach, Executive Editor

Guardian Analytics, specializing in predictive analytics-based fraud prevention, has just released a new study on the pervasiveness of fraud targeting small and medium businesses (SMBs) and the impact it has on businesses' relationships with their banks. Guardian Analytics worked on the report with Ponemon Institute, an independent research firm.

The "2011 Business Banking Trust Study," which includes responses from 533 executives and business owners, reports that little is being done to address corporate account takeover and fraud affecting businesses and banks. The study reports: "The data shows that fraud is still pervasive, money is leaving accounts unnoticed at an alarming rate, and businesses will leave their banks because of it."

The report goes on to say, "While businesses are taking some precautions, their overall expectation is that banks will protect them."

A few highlights:

- 56 percent of businesses experienced fraud in the last 12 months. Of these, 61 percent were victimized more than once.
- In 78 percent of fraud cases, banks failed to catch fraud involving the illegal transfer of funds or other nefarious practices, such as information identity theft.
- Banks were unable to recover funds in 68 percent of cases.
- 43 percent of businesses said they had changed banks after a fraud incident.

Click here to download the study.

My article in the June issue of BankNews magazine will focus on the issue of fraud and how four banks are addressing the problem.