Fraud in ministry sounds like an oxymoron, doesn’t it? If only it were. The reality is that by some estimates, fraud siphons off 6 percent of all the funds donated to churches each year.
Not convinced that it happens to ministries? Consider this. In a recent case, ECCU prevented the loss of a wire transfer from a member. We have encountered situations where staff at ministry organizations received email messages requesting an immediate wire transfer to a “missionary.” Through use of our security protocols, we identified this request as fraudulent and recovered the funds for the member.
The threats to your organization are similar to those you face at home. Common ones are phishing emails, which are a constant threat. They look valid but carry links that activate malicious viruses. Fake emails from apparently valid sources are another threat. Read about a recent example that occurred in Denver.
What can you do to decrease the likelihood of fraud at your ministry? Step one is to acknowledge the threat. The steps you take to prevent fraud are not unlike the practical security measures people take at home or work, like locking doors and file cabinets and requiring accountability. Here are some essential preventative measures:
Review activity regularly. Bankers call this “due diligence,” and you can’t overstate its importance. Monthly statements are a good place to start. And with today’s online technology, you can easily review your bank or card activity frequently, even when you’re on the go. With tablets and phone apps it can take just a few moments while waiting for a meeting to ensure there are no irregular transactions. And transactions can often be imported into your financial software for quick sync and review.
Track some transactions daily. For example, electronic funds transfers like ACH should be reviewed daily since they have a 48-hour return window.
Establish and follow internal controls, including separation of duty protocols (signers, reviewers, etc). These measures can be perceived as a burden, but the risk of not following them is far greater.
Question and validate all emails. Look for inconsistencies. Does the request seem valid? Is it from a known source?
Another key to preventing fraud is working with a financial institution that shares your commitment to guarding ministry funds. Here are three steps ECCU takes to safeguard member deposits:
Fraud detection systems. We employ a series of safety features that guard against fraudulent activity. We regularly review and update our internal security measures, and we have systems for reviewing transactions to help stop potential fraud.
Wire transfer verification. We regularly take the time to call back on wire transfers, providing an extra layer of security. This ensures that these transfers come from you and are going where you want them to go.
Verification contacts. Card services staff will call or email members when card purchases are done from locations or merchants with frequent fraud incidents.
One final note. While ECCU works hard to protect your funds, we need your help to make these efforts effective. You must make fraud prevention a high priority with your staff. Talk about it. Read about it. Pass along best practices. And most importantly, practice it.