Meanwhile, fraudsters are adapting their attacks to try to stay ahead of corporate defenses, often employing multiple schemes to expose vulnerabilities. Sahota and Lawrence Pannell, Market and Partner Development Leader for Early Warning, say that companies need to take a multi-dimensional approach to fraud prevention and detection, using a combination of technology, manual reviews, well-designed internal controls, and enhanced employee training.

Protecting Across Payment Methods

While checks remain the most common payment method susceptible to fraud, this year's survey found increases in ACH debits, wire transfers and card payments, compared to the 2023 survey. As such, simply moving from paper checks to electronic payments does not seem to eliminate fraud risks. Instead, companies need to get to more of the root issues, such as combating business email compromise schemes (cited as the most common form of fraud survey respondents), as well as high risk situations during the customer lifecycle like changes to supplier information.

"If you don't have the appropriate controls in place, shifting from one payment mechanism to another still leaves you open to risk," says Pannell.

When it comes to recovering funds, however, payment method can be a factor. For instance, ACH payments have a recall feature, whereas wire transfers are permanent and require the cooperation of the receiving bank, assuming funds have not been withdrawn. With any payment method, timing is crucial, notes Pannell, as the quicker you can discover fraud, the more likely you are to have a chance of remedying it. Knowing what to do and who to call in advance of a fraud incident (e.g., established policy and procedures) is also a significant factor in increasing the likelihood of recovering funds.

Proactive measures, like implementing training and education on payment methods, and leveraging technology to identify potential fraud activity, are of the essence. Ideally, businesses can identify threats faster and ward off attempts before they turn into losses, as only 28% recovered all of the funds temporarily lost to payment fraud.

Taking a Multi-Dimensional Approach to Fighting Fraud

Given the widespread prevalence of fraud risk, there's generally not a panacea: multi-dimensional threats require a multi-dimensional approach and multi-year investment. Pannell sees room for optimism in the survey respondents' emphasis on stricter authentication and verification processes (44%) and more training to teams involved with payments (43%).

"First entities need to educate employees involved in internal or external financial transactions about the different payment methods (e.g., wires, ACH, checks), how they work, purpose, etc., and the gaps that create the opportunities for bad actors to commit fraud, and then train employees how to appropriately administer or implement fraud management tools as part of well-designed internal controls to close gaps that could lead to financial loss due to fraud," says Pannell.

With survey respondents reporting payment fraud attempts across every stage of the customer lifecycle, fraud prevention likely requires a multi-faceted approach. "It's about finding the right balance—enough friction to prevent fraud without disrupting the customer experience." says Sahota. By partnering with experts, organizations can lower the total cost of ownership, avoiding the high expense of building these solutions internally.

"So it's not fraud prevention as an afterthought, but more by design, making it part of your DNA," says Sahota.

Curious About the Full Findings? Join us for an in-depth webinar where we'll unpack the key results from our B2B Payments Fraud Report.