Business Bank Accounts: How Safe is Your Money? Raleigh Law Firm

A growing number of businesses are using online banking and mobile banking is gaining in popularity.  However, most business owners are not aware that, unlike consumer accounts, business bank accounts are afforded little to no legislatively mandated fraud liability protection.  Although, some banks offer zero liability fraud protection for their business customers, that protection is not mandatory and may be subject to terms and conditions.  Furthermore, business accounts are a prime target for fraudsters because of the higher balances kept in the accounts, especially compared with individual checking accounts.  So what can be done to protect your business from being a victim of bank fraud?

The Uniform Commercial Code (UCC) does provide some protection to business bank accounts.  Specifically, to avoid liability the bank must have instituted “commercially reasonable” security procedures and follow any written instructions that were timely provided to the bank by the customer.  What constitutes “commercially reasonable” is something that is not well defined and has been the subject of an increasing amount of litigation.

In practice, the best way to protect your business is to make sure you understand what processes your bank has in place to protect against fraudulent transfers.  Many banks offer email alerts and the ability to set extra security prompts when the bank detects unusual account activity, such as a higher than normal transfer to a new entity.  Furthermore, if you would like your bank to always perform a specific action, such as verifying transfers over a certain amount with a designated employee, you should provide detailed written instructions to the bank.  Also, you should speak with your bank about how best to train your staff to avoid scams from fraudsters.  Lastly, if your bank does not offer fraud liability protection, you may want to research what options are available from another local bank.  While these few simple steps may not prevent all fraud, they will certainly help to protect your business. | Raleigh Law Firm