WASHINGTON – March 20, 2012 – Large
companies and their corporate payments systems remain the prime targets for
fraudsters, according to the 2012 AFP Payments Fraud and Control survey
released today by the Association for Financial Professionals (AFP).
Now in its eighth year, the 2012 AFP
Payments Fraud and Control Survey, sponsored by J.P. Morgan, found that two-thirds
of companies were hit by attempted or actual payments fraud during 2011, but few
incurred financial loss because they took measures to mitigate exposures.
“Although attempted attacks still
occurred in 2011, financial loss was typically avoided because companies have taken steps
to eliminate vulnerabilities,” said Jim Kaitz, AFP’s president and CEO. “The
Payments Fraud and Control survey reveals that checks remain highly vulnerable
to fraudulent activity, which has spurred many companies to switch to less
vulnerable electronic payments. Now fraudsters have shifted their focus to
higher-value payoffs, including attempting to hack into corporate accounts.”
Fraudsters aim for convenient targets of
opportunity, especially big companies that handle many checks. The 2012 survey revealed that larger
organizations were targeted more frequently than smaller ones (81 percent
versus 55 percent) and with a 22 percent higher average loss. Industries with
greater consumer access such as retail and insurance have fraud attack rates 15
to 20 percent higher than other industries.
More than 80 percent of companies
surveyed employ best practices such as positive pay and daily reconciliations
to mitigate fraud. When they do
experience losses, it is often because they failed to comply with their own fraud
“With the proliferation of payment
options, fraudsters are constantly exploring newer and bolder ways to
perpetrate fraud, making it necessary for treasury professionals to remain ever
vigilant against these emerging schemes,” said Stephen Markwell, executive director,
J.P. Morgan Treasury Services. “Sophisticated new fraud protection
technologies are making it possible to combat fraud more effectively and
efficiently, reducing the potential for losses and protecting critical assets. J.P. Morgan is pleased to once again sponsor
this year’s Fraud Survey and looks forward to the dialogue and best practices
the findings will generate.”
The survey revealed a noteworthy vulnerability:
payouts to check cashers (bank and non-bank) from holder in due course
situations. Most organizations have aggressively pushed to achieve 100 percent
electronic payroll to avoid this problem.
Additional key findings by payment type:
- CHECKS - Checks remain
the payment type most vulnerable to fraud attacks with 62 percent incurring
incidence of fraud and 26 percent of respondents indicating they have been
hit by frequent check fraud attacks.
Attacks typically spread out over the course of the year, but many
(38 percent) cluster together.
- ELECTRONIC CHECK CONVERSION - Electronic
check conversion services continue to experience a very low incidence of
fraud (two percent), making this service a good choice in helping minimize
instances of check fraud.
- ACH – Only 14
percent of organizations experience frequent attacks via ACH. As the least
likely target of fraud, ACH remains one of the most favored payment
mechanisms from a fraud control perspective.
- CARDS – The
incidence of business card fraud continues to be relatively low,
particularly on payroll and other benefit-related cards issued by
companies to employees. Organizations need to maintain strict control over
how, when and where their cards may be used.
For more information or to download the
survey results, go to www.afponline.org/fraud
In January 2012, AFP surveyed over 5,000 corporate
practitioner members with the job title cash manager, analyst, and director,
resulting in 399 responses, an adjusted response rate of nine percent. In addition, AFP surveyed non-member
corporate practitioners holding similar job titles, generating an additional 48
responses. This is the eighth year that AFP has conducted this survey.
ABOUT AFP® The Association for Financial
) is the daily resource for the finance profession. Headquartered outside
Washington, DC, AFP serves a network of more than 16,000 members with news,
economic research and data, treasury certification programs, networking events,
financial analytical tools, training, and public policy representation to
legislators and regulators. AFP’s global
reach extends to over 150,000 treasury and financial professionals worldwide,
including AFP of Canada; London-based gtnews, an on-line resource for the
treasury and finance community; and bobsguide, a financial IT solutions