As payment fraud continues to evolve, dealerships like yours are facing unique challenges in safeguarding your hard-earned financial assets. The 2023 AFP Payments Fraud and Control Survey provides valuable insights that deserve your attention, as they directly impact your daily operations and financial security.
Addressing Vulnerabilities: Rising Trends in Payment Fraud
Since 2021, the number of businesses reporting commercial card fraud has soared by 10%. It’s an alarming trend that’s not only affecting various industries but, more importantly, dealerships like yours. As you know, the automotive sector relies on transactions, and this rise in commercial card fraud has a direct impact on your financial security.
Moreover, there’s been a 6% increase in ACH credit fraud, and this is no small matter for dealerships. ACH payments are the backbone of many of your transactions. This upward trend underscores the pressing need for enhanced payment security measures tailored to the automotive industry.
A Growing Threat – Business Email Compromise Scams
Let’s talk about a significant concern that affects dealerships daily – Business Email Compromise (BEC) scams. In 2022, 71% of companies, including dealerships, fell victim to payment fraud via email. These scams involve fraudsters impersonating employees and vendors, making them a serious and ongoing threat that dealerships must address.
These sophisticated BEC scams often begin with email compromise, where fraudsters gain unauthorized access to an employee’s email account. Once inside, they can impersonate the employee, sending emails that appear genuine to others in the organization. This makes it challenging to distinguish between a legitimate and a fraudulent request.
With dealerships relying on electronic communication for various financial transactions, the automotive sector remains an attractive target for fraudsters. Your dealership must remain vigilant and proactive in guarding against this threat.
Persistent Vulnerability of Checks
Despite the rise of digital payment methods, checks have a curious persistence when it comes to vulnerability to fraud. Even as the world goes digital, checks continue to be a payment method prone to fraud, with 63% of organizations reporting check fraud activity in 2022.
Checks have been a part of dealership processes for years, but their continued use exposes dealerships to financial risks. They may feel like a trusted, old friend, but they also leave the door open to payment fraud.
Strengthening Security and Mitigating Risk
So, how can your dealership address these vulnerabilities effectively and shore up your financial defenses? Consider implementing comprehensive payment automation, which can offer these three crucial advantages, tailor-made for the automotive industry:
- Streamlined Separation of Duties: Payment automation technology ensures the separation of duties, making it impossible for a single person to handle both approval and check signing. This fortifies your internal controls and helps protect against fraud.
- Robust Vendor Data Management: Payment automation providers securely store and continuously update vendor data in the cloud, adding layers of security to your vendor relationships. Any attempt to change banking information undergoes rigorous validation, reducing the risk of fraud in this crucial area.
- Embracing Virtual Cards: Payment automation offers a fresh approach to payment security. You can use virtual cards to pay many of your vendors securely. These cards provide unique 16-digit numbers linked to specific vendors, making them a far more secure choice compared to traditional checks. Virtual cards significantly reduce the vulnerability of your payment methods.
Payment fraud remains a persistent threat, and dealerships must stay vigilant in protecting their financial assets. The trends in commercial card fraud, ACH credit fraud, and the prevalence of BEC scams underscore the importance of taking action to secure your dealership’s finances. By adopting payment automation technology with Corpay, you can mitigate these risks and ensure your dealership continues to thrive in an ever-growing, increasingly digital business landscape. To learn more about how Corpay can safeguard your dealership, reach out to our in-house experts today.