Resource Center / Small Business

How To Protect Against Checking Account Fraud

Written by Live Oak Bank

How To Protect Against Checking Account Fraud

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If you’ve taken the wise step of separating your business finances from your personal finances and decided to open a business checking account, you will need to take steps to protect that account from fraud. Unfortunately, fraud is rampant today, and small businesses can be targets for cybercriminals. Your bank will of course offer some protection, but there are several steps you can and should take to ensure you don’t become a victim.


Select the right bank

When choosing a bank, inquire about their security measures to prevent checking account fraud. Your bank should use technology that protects your usernames and passwords. The bank should also employ data encryption tools to protect their customers’ data as well as firewalls that only allow authorized users to access their networks. The bank should also monitor activity logs to identify possible threats. Check to see if your bank offers multi-factor authentication for online banking and inquire about services that help you recover from fraud if it occurs.

Maintain your privacy

Privacy is paramount across all your finances. Always protect your login information and keep passwords secure. Never store this information in places that are easy to access, such as your notes app on your phone. You might want to consider a password manager app that will store all of your passwords, encrypt your information, and monitor for data breaches. Be sure to keep your phone and other mobile devices secure by requiring a code to unlock them.

Be careful with your passwords

Selecting your passwords is of the utmost importance in protecting your account. Always use passwords that are between 8 and 12 characters long — the longer the better for more security. Include numbers and characters as well as letters. Never use personal information in your password such as a spouse’s name, pet’s name, birthday, or anniversary.

It’s important to create a unique password for every site you use. Cybercriminals hope that you will use the same password for multiple sites, and they can hack a site that has minimal security to gain access to your password. If you use that same password for your business banking activities, they could easily access your accounts. You should also change your passwords frequently — ideally every month, but at least once per quarter.


Use multi-factor authentication

You will also want to ensure that you have multi-factor authentication on your banking accounts. The process of signing into an account is called “authentication,” and is typically entering just a username and password. However, this has proven to be risky as usernames and passwords can sometimes be hacked. Therefore, banks have moved to multi-factor authentication, in which you will need to enter another factor in addition to your username and password to ensure extra security. Additionally, when you or anyone else tries to log into your account, the authentication process can send you a code via text, email, or phone to ensure that you are indeed attempting to log in. This process occurs about once a month on your regular browser and whenever someone is attempting to log in on a new browser.

Beware of shared computers and WiFi

Never trust a shared computer. They can be rampant with viruses, and criminals can install software on them to track your activity and steal your personal data. If you absolutely must use a shared computer, do not visit your banking account or any site that has your credit card stored on it. And certainly, you should never connect your mobile device or an external storage drive to a shared computer. Likewise, never use shared public WiFi to access your financial accounts as cybercriminals can hack devices on public WiFi to steal your information.

Stay vigilant during your online activity

Maintain security on your own computer as well. Ensure that your antivirus software is constantly updated. Any time you enter information on a website, make sure you see that the “http” is followed by the letter “s,” which indicates the site is indeed secure. Be careful downloading documents or apps off the internet. And never click on a link that has been emailed to you if you don’t know and trust the source.

Protect personal papers

While protecting online activity is paramount, don’t forget to protect your physical documents as well. Use a shredder to destroy documents such as your checking account, debit card, and credit card statements, as well as your credit report or any other documents with sensitive information. It seems old-fashioned, but fraudsters still dumpster dive to steal information.

Protect your PIN

Likewise, don’t forget to watch for someone trying to steal your PIN number when using your debit card. When you select your PIN, never use a birthday or anniversary. Then be sure to protect that PIN whenever you use it — while purchasing supplies or using an ATM. Make sure that no one else can see it by covering your hand while typing. You might not be able to recover funds stolen by a criminal who steals your PIN.

Diligently monitor your account

You should constantly monitor your account activity — checking your balance and transactions several times per week or even daily. If you notice anything suspicious, you should contact your bank immediately. By catching any attempted fraud early, your bank will have the opportunity to block the activity, and you’ll have a greater chance of recovering your money.


Use Positive Pay

Positive pay is an automated service that financial institutions use to detect check fraud. It matches the account number, date, check number, and dollar amount using a list you provide. Anything that does not match is marked as suspicious and returned to you for review – offering an extra level of security. Positive pay is easy to set up and reduces the risk of financial loss. Check with your bank to see if they offer positive pay.

These actions may take a little extra of your precious time, but they could save you much more time — and money — if you are the target of criminal activity.


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