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Preventing fraud at your firm

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If your firm did not experience some sort of fraud last year, consider yourself fortunate. According to the Association of Financial Professionals’ 2010 Payments Fraud and Control Survey, nearly three out of four organizations were victims of fraud attempts or losses last year and 90 percent of the affected companies experienced paper check fraud. And if the statistics regarding checks aren’t scary enough, Internet scams are also on the rise. The California State Bar reports receiving growing numbers of complaints from lawyers about receiving electronic solicitations.

Often these scammers use the names of real attorneys and try to lure unsuspecting victims into wiring these imposters their retainer after collecting a debt, only to find out the check received wasn’t good in the first place.

So what can a law firm do to protect itself in these perilous times? A few basic precautions can help you steer clear of these fraudsters.

Rethink checks When paying with a check, firms are at a greater risk for check writing fraud. Not only can criminals create counterfeit checks with the information found on your MICR line data, but there are also countless techniques for altering payee information on issued checks. Fraudulent check writing reached $50 billion in 2009 according to consulting firm Treasury Strategies and is still the primary method of payment fraud -- ahead of both credit card fraud and ACH fraud -- despite growth in electronic banking.

Secure access to critical financial information, systems and supplies Painful but true, a large percentage of fraud is perpetrated by staff members who you trust.

In tough economic times, the very people we work with may feel driven by financial pressures to commit crimes in their workplace. Even with trusted employees, be sure to implement processes with inherent checks-and-balances to monitor accounts and never let one individual be solely responsible for financial matters.

Know your clients While it may be tempting to take on an unknown client during these tough economic times, you must do your due diligence to ensure that clients are who they purport themselves to be. And always use caution when anyone asks you to process money quickly.

Be vigilant about computer security Firms should consider using a dedicated computer to conduct all banking transactions. One of the best practices is removing all email programs and employing URL filtering to restrict Internet access to only your banking website. Also, always update the operating systems on all your computers regularly to add security patches written by software companies.

Lastly, only install Internet security software from reputable vendors.

Find a financial partner with advanced fraud prevention services Positive Pay, ACH Debit Blocks, Electronic Payment Authorization, Universal Payment Authorization Codes and Security Tokens are just some of the tools that your firm can use to protect sensitive financial data. Reach out to a trusted financial advisor and discuss your options and help ensure that your firm doesn’t become another statistic.

- Submitted by Whitney Price, Vice President, Legal Specialty Group, The Private Bank at Union Bank, N.A.

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