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Bank Fraud

Small businesses face significant challenges when dealing with bank fraud due to limited protections compared to consumer accounts. Jordan Harbinger explains that while consumer accounts are safeguarded under Regulation E of the Electronic Fund Transfer Act, business accounts fall under the Uniform Commercial Code, which offers fewer protections 1. This discrepancy leaves businesses vulnerable, as they must rely on their own resources and bank-specific fraud detection services, which often come at an additional cost. Gabriel Mizrahi highlights a case where a business lost $30,000 due to unauthorized ACH debits and was denied reimbursement because the fraud wasn't reported within 24 hours 2.

If the account holders are not checking their account more frequently than every 24 hours, even on weekends and holidays, their money is at risk because the bank does not need to reimburse or assume any responsibility.

--- Gabriel Mizrahi

This situation underscores the need for businesses to be vigilant and proactive in monitoring their accounts.

   

Safety Measures

To safeguard against bank fraud, small businesses should implement robust security measures. Jordan Harbinger advises switching to banks with better protections and utilizing tools like Positive Pay and ACH filters to detect and block unauthorized transactions 3. He also recommends setting up multi-factor authentication and transaction alerts to enhance security 4. Regularly checking accounts and considering commercial crime insurance are additional steps businesses can take to protect themselves.

Losing 30k to scammers, not being protected, it's a really tough pill to swallow.

--- Jordan Harbinger

These measures, while sometimes cumbersome, are essential in mitigating the risks of fraud.