GIACT, the leader in helping companies positively identify and authenticate customers, announced a new report, Securing Faster Payments: Addressing the Account Validation Rule, on the rapid growth of ACH payments, the latest fraud trends surrounding faster payments as well as how to secure ACH transactions. The report comes in advance of Nacha’s upcoming WEB Debit Account Validation Rule, slated to take effect on March 19, 2021, and serves as a guide on how to apply proper account validation measures(GIACT).
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“The latest rule change from Nacha is a welcome step when it comes to strengthening fraud protections,” said Kimber Johnson, EVP, Strategic & Client Relations at GIACT. “By adding account validation as a required component of a commercially reasonable fraudulent transaction detection system, businesses will have a better understanding of who they are disbursing money to before a payment is issued. The move will also help deter some of the more commonly used cybercrime tactics – including different types of identity fraud schemes, business email compromise and other social engineering tactics – but it’s not foolproof. Businesses will also need to examine how to apply more robust account validation measures that extend beyond simply confirming if an account is active.”
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According to the report, ACH payments have become increasing popular, particularly as more and more transactions and accounts move online. In the first half of 2020, for example, Nacha reported its network volume reached 13 billion payments – an increase of nearly one billion payments compared to the same period a year earlier. Speed has also been key to the network’s growth as highlighted by a 37% jump in Same Day ACH volume in the second quarter of 2020 compared to the same period a year earlier.
“The paradox of faster payments is that it can also lead to faster instances of fraud,” said Erika Baumann, Senior Analyst, Wholesale Banking & Payments at Aite Group. “The past six months have been an extremely busy time for fraud operators. They’ve used the pandemic to socially engineer or apply malware that can leverage business and consumer accounts in order to misdirect funds. It’s now more important than ever, especially as the protocols for securing transactions move from the office to the home, that businesses apply advanced account validation measures that will give them a full, precise picture of the receiving account.”
