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How to manage digital money transfers safely

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The ability to utilize electronic payment networks to send or accept cash is becoming more prevalent and easier than ever. However, so does the risk of fraud and scams because cybercriminals know that funds moved electronically are hard to trace and/or recover since there is not a physical check to represent the transaction.

When transferring money online it’s not always possible to know exactly who is on the receiving end of the funds which allows cybercriminals to defraud the payer through fraudulent or unauthorized transactions and data theft.

Recently there has been an increase in cybercriminals scamming people into online wire transfers and payments using the Zelle payment network by tricking users into sharing sensitive information.

Despite legitimate banks and online merchants facilitating Zelle (and other payment options) fraud can still occur as cybercriminals exploit opportunities in the transfer process. For example, Zelle only requires the email address or mobile phone number associated with a Zelle account in order to move funds. This convenience comes with increased risk as Zelle doesn’t have the same protections against fraudulent charges as credit cards or debit cards and the only way to cancel a Zelle payment is if the recipient hasn’t yet enrolled in Zelle. If the recipient is already a Zelle user, the payment cannot be canceled.

 Suggested safeguards:

  • Don’t disclose personal information without verifying the legitimacy of the source of the request. If needed, reach out to the company directly
  • Don’t make your account access easy to guess or discern with limited knowledge of your personal information (ie: pet name, common phrases, etc.)
  • Utilize 2-factor authentication for added protection

 Never use Zelle when:

  • Someone claims to be from a government agency
  • You do not know the person making the request (ie: telemarketer)
  • Someone claims your account is compromised
  • Anyone asks you to send money to yourself
  • A friend, relative or coworker has reached out online (without verifying via a phone call that they actually sent the request)
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Are You Protected?

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Despite the interruptions to business as usual over the last eighteen months, it is still critical that churches maintain policies and procedures that assure a proper level of control over church assets, especially cash.  Proper controls protect both the church from theft and the staff and volunteers from any false allegations of wrongdoing.   It is not a matter of IF someone would violate the church’s trust and embezzle funds but COULD they do so as the result of weak internal controls.  Here are some basic guidelines:

  1. Lock all collections in a fire-proof safe until two or three unrelated people can count the money together
  2. Collections should not be taken off site to be counted
  3. All cash (both loose and in envelopes) should be recorded on a “Receipts Record” and each counter should sign the form to indicate that they agree to the amount counted.
  4. The deposit should be taken to the bank as soon as possible.
  5. Verify that the deposit and the “receipts records” match, thus verifying that all monies counted equals the amount of the weekly deposit.

For a check list of these and other internal control issues, please email us.

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Free Credit Reports

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You can check your credit report for free annually (once for each of the three major credit reporting agencies).  However, due to the pandemic, you are now able to obtain a free report weekly until April 20, 2022.

To request your free credit report, go to AnnualCreditReport.com.  You will have to provide some personal information to verify your identity (date of birth, Social Security Number, and address).  The report will provide a detailed list of all your open and closed accounts, payment history, any late payments, recent credit inquires and additional personal information.

With the prevalence of data breaches, it is necessary to monitor this information at least monthly.  Look for errors – things like inaccurate late payments or accounts that you did not open and then dispute those with the credit bureau.  The website will provide instructions on how to report any errors.

There are also credit monitoring services available which will alert you to any suspicious activity.  Some are free from your bank or credit card company, while others charge a monthly fee.  Also call your homeowners insurance and inquire about the cost of a rider that will reimburse you for the expenses incurred if your identity is stolen.

Always review your report prior to applying for a loan to make sure there are no errors affecting your score that need to be corrected.  Finally, avoid going to freeannualcreditreport.com, which charges a fee to be able to access your report.

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FRAUD (continued)

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“Internal theft of church funds remains a pervasive and largely unaddressed problem in churches.” Richard Hammar

One expert in church fraud explains that three things are present in most cases: a perceived opportunity, financial pressure, and rationalization.  The number one sign to look for is the lifestyle of the person.  If they seem to be living a lifestyle beyond what they earn, this could be a red flag.  In forty-two percent of fraud cases, the guilty party was living beyond their means.   Twenty-six percent were struggling financially.  It should go without saying that putting someone who is struggling with money issues or has had a recent financial hardship in charge of church funds is not a good idea.

Other red flags are someone who refuses to take time off, refuses help or complains that they are underpaid.

Since a leading cause of fraud is the lack of segregation of duties, whenever possible, have separate people count the money, pay bills/sign checks, and reconcile the accounts.  At the very least, someone not involved in the handling of cash should review the bank statement each month.  As Ronald Reagan once said “Trust, buy verify”.

Finally, no one should ever count money without someone else being present.

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FRAUD

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Each year, the amount of money stolen from churches exceeds what churches give to missions.  Let that sink in.

30% of churches are the victim of fraud/embezzlement each year.  Most is never detected and when it is, 80% does not get reported to law enforcement.  The loss was $39 billion in 2014 and expected to be $80 billion by 2025, with the average loss being $120,000.

Keep in mind – there is no such thing as a small fraud.  They are just testing the system before going bigger.

Most church leaders find it hard to believe that someone they trusted would steal from the church.   However, often it is the most trusted and “loyal” person in the church.

The biggest issue contributing to fraud is a lack of segregation of duties.  During this season, when churches have mostly been shut down, it is important to make sure that internal controls are not relaxed. It’s not enough to have written policies, you need to enforce and audit them often.

If nearly 1/3 of churches are victims of fraud, what are the chances right now that you are one of them?

The best deterrence is to create the perception that they will get caught.  If you need more ideas on setting up internal controls, please let us know.  Your church insurance company may also be a good resource.

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Tax Scams

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Tax scams run year-round.  You may receive a telephone call claiming to be someone from the IRS.  The call usually includes a threat that the police are on their way to arrest you, unless you pay immediately using a debit or prepaid card.  They may also ask for your banking information so that you can get your long-awaited refund.  The IRS does not operate this way.  They always contact you first via the mail.

There is also a new scam via email.  It will likely include language such as “electronic tax return reminder”.   The IRS does not send out emails regarding tax refunds or other sensitive information.  Do not respond, no matter how legitimate it appears to be.  The email may even contain a one-time password to access your files.  Using the password will infect your computer with malware.

If you owe the IRS money or if they have a question regarding your refund, they will mail you a notice.

If you have been contacted, and feel it is a scam, call the Treasury Inspector General at 800-366-4484. If you receive a call and you do owe money, call the IRS at 800-829-1040 and talk to an agent.  You can also send any suspicious emails to: phishing@irs.gov.