Heading off Potential ACH Fraud

by Sarah Grotta 0

Same day ACH is about ready to begin its three-stage rollout this week. Financial institutions have varying degrees of interest in the faster ACH transaction, but what they all share is a concern about fraud. The faster the payment is transacted, the less time there is to recognize and stop fraudulent transactions.

As reported in Banking Exchange:

Same-day ACH service, which begins the first stage of its phase-in on Sept. 23 for credits, promises improvement for the payments system. But it—and other faster-payments initiatives under consideration—also represent potential for fraudulent activity. There’s a consensus that exposure to fraud will rise as criminals exploit tighter deadlines, as the same-day framework is rolled out in its three phases.

As a result, new tools are being launched:

Guardian Analytics has launched a real-time solution to help ODFIs—originating depository financial institutions—to catch questionable transactions while analyzing transfers batched for same-day processing. The intent is to expedite processing to meet new deadlines while kicking out transfers that appear to be suspicious with the company’s ACH-ODFI Real-time.

“The key to this is real-time intervention, to have the ability to catch things before they go out the door,” says Luis Rojas, Guardian’s vice-president of product management. “The bad guys always exploit disruptions in the market.” The company’s solution relies in part on analysis for anomalies—departure in the transaction to the sender’s historical behavior.

These types tools will be needed quickly. Some banks are already seeing an increase in suspicious activity as fraudsters are testing the current standard ACH capabilities to understand how they might be able to exploit transactions when same day ACH becomes a reality.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

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