Protect yourself against IBAN fraud: Best practices guide

Explore how payment digitization, while bringing speed and efficiency, also introduces risks like IBAN fraud. Learn how to minimize these risks and establish effective protections.

Digitized payments have transformed business transactions, making them faster and smoother with improved tracking of financial activities. But this shift also opens doors for sophisticated fraudsters who find ways to slip through security gaps. IBAN fraud isn’t limited to large corporations; it affects businesses across all sectors, including the equine industry. The impacts can be serious—leading to financial losses and hurting the reputation of affected businesses.

With these preventive strategies in place, and by raising client awareness, you can reduce the risk of fraud and help safeguard your business's financial health and reputation.

Potential Consequences of This Type of Fraud

Many IBAN frauds start with a hacked email account. Instead of locking the user out, the fraudster quietly gains control, allowing them to edit attachments—like invoices—by swapping legitimate IBANs for fraudulent ones. Payments are then redirected to the fraudster’s account.

When scammers successfully alter bank details on an invoice, they can siphon off significant funds before anyone even notices. Beyond the financial hit, this kind of fraud can strain relationships with clients, lead to costly legal battles to recover funds, and erode trust with clients and partners.

The Bank of France has recently reported a rise in scams targeting bank account details, emphasizing the need for stronger security practices and increased awareness among employees and clients. In light of this, adopting solid cybersecurity practices is more important than ever.

Secure Your Email Accounts

Here are some steps to secure your digital communications:

• Use complex passwords: Choose long, unique, and complex passwords for each email account, and avoid reusing them on other platforms.
• Enable two-factor authentication (2FA): Adding this extra layer of security makes it much more difficult for unauthorized individuals to access your account.
• Be skeptical of emails by default: Approach emails, especially those with critical financial information, with caution. Always verify this information through other channels, such as a phone call.
• Stay vigilant: Assume emails may be untrustworthy and confirm sensitive information via another communication method.

New IBAN? Proceed With Caution

A critical rule to protect against IBAN fraud is to treat any communication with a new IBAN as potentially fraudulent. If you receive a new IBAN, take these steps:

• Cross-check by phone: Directly contact your supplier using a known, verified phone number (not the one in the email) to confirm the new bank details. This is essential, as an incorrect IBAN can result in funds being transferred to the wrong account.
• Use IBAN Validators: Maintaining an internal database of verified IBANs, whether via your bank’s third-party management or management software, is an effective measure. Default to using these validated IBANs rather than those shown on invoices. For any updates to bank details, perform thorough verification before making payments.

Best Practices to Implement

Training and Awareness

Train your teams to recognize phishing attempts and other hacking techniques. Awareness is one of the strongest defenses against cyber threats.

Invoice Verification

Always confirm invoice details and bank information over the phone or in person if possible. A simple check can prevent major financial losses.

Regular Updates

Ensure your software and security systems are kept up to date to guard against new threats. Regular updates address vulnerabilities that hackers may exploit.

Spread the Word

Feel free to share this guide with your clients to help them stay aware and keep their transactions secure. Cybersecurity is a shared responsibility, and by following these tips, you’re taking solid steps to protect your data and finances from fraud and online threats.

Conclusion

Staying alert and setting up strong security practices are key to defending against IBAN fraud and cyberattacks. Following the steps here can help you lower risks for both your business and your clients. If you’d like more tips on cybersecurity, the Equideclic team is here to help.