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Survey Shows Payment Fraud on the Downswing

Fraud is declining, but remains a threat to corporations.

A survey conducted by the Association for Financial Professionals found the corporations' payment systems are still sitting squarely in the crosshairs of fraudsters' sights. The 2012 AFP Payments Fraud and Control Survey was sponsored by J.P. Morgan and revealed that a large majority of

A survey conducted by the Association for Financial Professionals found the corporations' payment systems are still sitting squarely in the crosshairs of fraudsters' sights. The 2012 AFP Payments Fraud and Control Survey was sponsored by J.P. Morgan and revealed that a large majority of companies were either actual victims of or had been targeted by those wishing to commit payments fraud last year.

Out of the responding organizations, 80 percent said they try to battle fraud by engaging in daily reconciliations and positive pay. Fraud losses typically occurred as a result of the companies' failure to observe their corporate fraud policies.

"Although attempted attacks still occurred in 2011, financial loss was avoided because companies have taken steps to eliminate vulnerabilities," stated Jim Kaitz, AFP's president and CEO. He noted that checks are persistently vulnerable to fraud, and companies have adopted electronic payments to combat this. "Now fraudsters have shifted their focus to higher-value payoffs by hacking into corporate accounts," Kaitz added.

Checks were deemed the payment method most susceptible to fraud, while cards, automated clearing houses and electronic check conversion enjoyed much lower fraud rates. The proliferation of digital payments and online banking has also opened up new avenues for hackers and criminals hoping to gain access to corporate and personal accounts. Many businesses have started to insulate their networks and adopt other data security best practices in an attempt to avoid further losses.