The ACH Network’s ever greater volumes raise an important question: how do credit unions, who increasingly rely on ACH, ensure that their ACH payments are protected?

The use of the ACH Network skyrocketed during the pandemic, prompted by the need to provide faster digital payments and quicker reconciliation of payroll, stimulus, business-to-business, person-to-person, and other payments. ACH was already heavily used to facilitate direct deposit of payroll, Social Security, and other major payments.

In fact, Nacha announced a record year in 2021, with more than 29 billion payments (16.4 billion debits, 12.7 billion credits) totaling $72.6 trillion. The growth in transaction volume in 2021 was up 8.7% year-over-year. Same Day ACH reached $943.7 billion on 603.8 million transactions, a value increase of 105% compared to 2020.

But with record growth, coupled with higher dollar limits, credit unions also need to be aware of potential fraud risk.

According to the Faster Payments Council (FPC), several fraud schemes are of concern. Detailed in an FPC letter to the Federal Reserve, concerning schemes include:

• Account takeover. Account takeover is when a fraudster gains unauthorized access to a user’s account. Successfully taken over, the fraudster usually changes the credentials to lock the victim out, while transferring as much money as they can into a fraud-controlled account. 
• Application fraud. Application fraud is when a fraudster uses a stolen or synthetic identity to apply for a loan or line of credit. The fraudster will then transfer monies into their account and leave the victim in the lurch. 
• Transaction fraud. Transaction fraud is when a fraudster cons consumers, or individuals at a business, to send them payments under false pretenses. This is usually accompanied by social engineering tactics, carried out via email or phone, and involves advertising fake services, threats, or having the victim change billing information.

In short, fraudsters are deploying a variety of tactics to take advantage of faster payments. They are armed with vast troves of personal identifiable information (PII), technology, and manipulative tactics that they aim at credit unions and their members. Without proper measures in place, these types of payments fraud schemes will persist, translating into dollar losses and loss of trust.

In response, to protect faster payments as well as help meet Nacha’s compliance efforts, Advanced Fraud Solutions released TrueACH with Account Validation—a new ACH tool that enables credit unions to confirm the account status, account owner, or authorized user(s). 

TrueACH with Account Validation does this by triangulating the identity of a query against an industry-leading, financial institution-contributed database that includes account status, account owner, and authorized user identity. 

With TrueACH with Account Validation, credit unions can confirm if the person is authorized to transact on an account and further their efforts to meet Nacha’s compliance standards.

To learn more about TrueACH with Account Validation, and how you can better protect your ACH payments, schedule a demo today. 

JOSH SHEEHAN is vice president of sales at Advanced Fraud Solutions.