NEW YORK – JPMorgan Chase & Co. JPM.N, the country’s largest lender, is stepping up payment fraud protections for its small and mid-sized business customers, which continue to be targeted by scammers – particularly amid the COVID-19 pandemic.
Four-in-five small and mid-sized companies say they were targets of payment fraud last year, but that could be reduced if businesses use more tools to detect suspicious payments early, JPMorgan executives told Reuters.
The bank’s new self-service “fraud hub,” being introduced on Monday, will allow them to set alerts for unusually large payments and control who gets paid. The service supplements the current system in which customers call the bank to set controls.
“Fraud is a major concern and can be devastating for businesses,” said Jennifer Roberts, chief executive of Chase Business Banking. “We want to provide them with safeguards that are easy to set up and customize for their transactions.”
The measures come amid a broader industry campaign to get businesses to be more vigilant against a major source of payment fraud: legitimate-looking emails, often impersonating the chief executive, with bogus instructions for paying suppliers or other third parties.
These email scams cost companies $1.7 billion last year, according to the Federal Bureau of Investigation, and have been on the rise as fraudsters attempt to exploit uncertainty caused by the COVID-19 pandemic.
While big companies are frequent targets of scammers, smaller companies tend to be more vulnerable because they have less sophisticated internal controls.
To help small businesses spot vulnerabilities, the bank is offering to add a “safety meter” to customer account dashboards which graphically shows how they score on setting safeguards, including suspicious transaction alerts.
Since the advent of paper checks, banks have encouraged customers to take steps to thwart fraud. That remains important because about 40% of business-to-business payments are still made by check, according to the Association for Financial Professionals.
But the move toward fast digital payments has increased the need for much stronger controls, said Jennifer Barker, a wholesale payments executive at JPMorgan. For JPMorgan, less fraud should make for happier customers and save the bank the cost and hassle of having to recover funds.