Commercial
Banking2023 Payments
fraud update

Fraud concerns keep companies up at night78%

Companies that perceive
fraud threat levels haveincreased in the past year

Organizations of all sizes, all industries, aretargets for payments fraud. Keeping pacewith the ever-changing fraud landscape isvitally important for corporate treasurers
and finance professionals.

Source: Strategic Treasurer & Bottomline, “2023 Treasury Fraud & Controls Survey Report”

Once vs. 100% is how often
payment fraudsters needto succeed in their attempts,
compared to the vigilance
employees must maintain.

As fraud techniques become moresophisticated, strong internal controls,
ongoing education, targeted technologies,
and open communication with your bankcan help mitigate your risk and provide
peace of mind.

Source: Abnormal Security, H1 2023 Email Threat Report

Ransomware steals the headlines,
but BEC poses a greater risk
What is Business Email Compromise (BEC)?
Also known as imposter fraud
A fraudster impersonates a vendor, a company executive, or another trusted
trading partner, ultimately tricking you into making the payment to them.
This kind of fraud is very hard to detect because you have been deceived into
actually being the one making the payments.

~22,000
Business
EmailCompromise

FBI fraud
complaints
in 20229x greater
Less than

2,500
Ransomware

Source: Federal Bureau of Investigation, “Internet Crime Report 2022”

8 in 10 companies reported actual orattempted BEC losses, totaling . . .

increase+13%

Over $2.7 billion

compared to2021 fraud losses

in fraud losses in 2022

Source: Federal Bureau of Investigation, “Internet Crime Report 2022”

Checks remain themost vulnerable
payment method

63%
Companies thatexperienced checkfraud in 2022

Paper items present more opportunities forfraudsters, from mail theft to altering dollar
amounts or forging signatures. Even blank checkstock becomes a valuable commodity in the handsof bad actors.

Source: Association of Financial Professionals,“2023 AFP® Payments Fraud and Control Survey”

Turbulent times create ideal
fraud opportunities
Any disruption to “business as usual” gives bad actors coverto pursue payments fraud. During these events, company
resources may be deployed elsewhere or distracted, making it
more challenging to spot and mitigate potential fraud. As threat
levels rise, companies must increase their vigilance and takeextra precautions to avoid becoming fraud targets.

Examples• COVID-19 pandemic• Natural disasters• Industry turmoil

When innovation occurs, fraudsters follow%
53

Faster payments require
a new approach
Irrevocable transactions and speed of settlement make faster
payments a growing target for fraud.

Companies concerned
about potential fraudrisks of faster payments

Recovering funds paid in error or due to fraud becomes morechallenging with real-time payment networks.

Source: Strategic Treasurer & Bottomline,“2023 Treasury Fraud & Controls Survey Report”

As your company adopts new methods, set up clear criteria forwhen to use real-time payments. Document and train employees
on required approvals, reconciliation timeframes, and othercontrols that will mitigate your risks.

Artificial Intelligence
makes spotting fakes
more difficult

Scams
improvein quality

Deep fakes, ChatGPT, and other AI technology
are elevating the quality of fraudsters’ attempts.
The bad grammar, spelling errors, and poor
design of past communications are no longer
clear giveaways.

Bad actors can now engineer hyperlinks
that display one address, but take you toanother. “Evil Proxy” servers attempt tobreak down two-factor authentication.

Unfortunately, fraudsters can take the same tools
developed to ease our workload and deploy themfor malicious purposes.

Four ways to protect your payments
In the fight against fraud, there’s no silver bullet. You’re best protected when you and your bank use a layered
security approach. Be at the ready with these fraud prevention best practices. Remember, in the fight againstpayments fraud, your employees are your greatest asset—and your biggest cybersecurity liability. While yourstaff must be right 100% of the time, threat actors need to be right only once (and they know it).

Set up strong internal controls•

Implement dual custody on all online payment services (ACH, wiretransfer, foreign exchange) and user administration management•

Set dollar limits for initiating payments or using money movement services•

Deploy two-factor authentication to access your corporate network
and initiate payments—according to recent AFP research,1 this is oneof the most effective techniques for preventing both BEC and accounttakeover (ATO) fraud•

Notify your bank immediately when an authorized signatory orapprover on your accounts leaves your company•

Establish a process to discontinue payments entitlements for retiring
or departing employees

1. Source: Association of Financial Professionals, “2023 AFP® Payments Fraud and Control Survey”

Take a preventive approach•

Never give out passwords, PINs, PINs plus token codes, or otherauthorization credentials, especially if you receive requests via phone oremail from individuals outside your organization•

Validate all payment requests using known sources for contact information•

Reconcile your accounts daily to detect suspicious activity•

Lock your check stock and signature stamps in a secure location•

Update your antivirus and antispyware software and firewalls regularly

Train (and retrain) employees•

Educate payments staff regularly on how to detect,prevent, and report BEC, phishing, and other fraud
schemes•

Deploy frequent communications to remind employees
they are the first line of defense against fraud

Be active with your bank©2023 Wells Fargo Bank, N.A. All rights reserved. Member FDIC.
TM-12176•Work with your relationship manager to add fraud
prevention solutions such as Fraud Manager, ACH Debit
Block, Positive Pay, and Account Validation Service•

Notify your bank immediately if your contact information(name, phone number, email, password) in Wells Fargo
VantageSM changes without you initiating the change