5 Proven Methods to Prevent Fraud

Vendor payment fraud is one of the fastest-growing risks facing finance and AP teams today. A single incorrect bank account update—often triggered by business email compromise (BEC)—can redirect payments to fraudsters and result in significant financial loss.

Validating vendor bank accounts is no longer optional. It is a critical control for fraud prevention, payment accuracy, and regulatory compliance.

This practical guide explains how to validate vendor bank accounts, compares manual and automated methods, and outlines best practices to help organizations protect vendor payments in 2024.

Why Vendor Bank Account Validation Matters?

Vendor bank account validation protects organizations in three key areas: ACH Payment Fraud Prevention, accuracy, and compliance.

1. Fraud Prevention

Vendor payments are a primary target for fraudsters, especially through BEC attacks where criminals impersonate vendors and request bank account changes.

• The FBI has reported a significant rise in invoice and payment fraud tied to BEC schemes.
• In one widely cited case, Cabarrus County lost millions after a fraudulent vendor payment diversion.

Validating bank accountownership ensures payments are sent to legitimate vendors—not criminals.

2. Payment Accuracy

Even minor errors—such as an incorrect routing (ABA) number—can cause:

• Payment rejections
• Processing delays
• Strained vendor relationships

Automated validation tools reduce these errors by confirming routing numbers and account status before payments are released.

3. Regulatory Compliance

Organizations must comply with financial and payment regulations, including Nacha rules and U.S. sanctions requirements.

Failure to validate vendors can result in:

• Regulatory penalties
• Sanctions violations
• Legal exposure

Proper validation supports audit readiness and compliance with financial regulations.

Methods to Validate Vendor Bank Accounts

Vendor bank account validation typically falls into manual and automated methods. Each has different risk levels and use cases.

Manual Vendor Bank Account Validation Methods

Manual methods are still used but carry higher risk and operational overhead.

Phone Verification

Calling a vendor to confirm banking details may seem effective, but it is risky:

• Caller identity is difficult to verify
• Phone numbers can be spoofed
• Remote work has reduced reliability

Voided Checks

Requesting a voided check confirms routing and account numbers but does not confirm:

• Account ownership
• Whether the account is active

Bank Letters

Bank letters on official letterhead are sometimes requested but:

• Can be forged
• Do not provide real-time verification
• Do not scale well

Automated Vendor Bank Account Validation Methods

Automated methods are faster, more reliable, and significantly reduce fraud risk.

Micro-Deposit Verification

This method deposits one or two small amounts into the vendor’s account.

How it works:

1. Small deposits are sent (e.g., $0.03, $0.12)
2. Vendor confirms the exact amounts
3. Ownership is verified

Pre-Note Verification (ACH)

A pre-note sends a zero-dollar ACH transaction to test account validity.

Limitations:

• Not all banks return ownership information
• Confirms account existence, not always ownership

API-Based Bank Account Validation

API integrations allow real-time verification during vendor onboarding or bank changes.

Benefits:

• Instant validation
• Scales for high vendor volumes
• Reduces ACH payment failures
• Supports audit trails

Best option for high-volume environments

Comparison: Vendor Bank Account Validation Methods

Method	Verifies Ownership	Speed	Fraud Risk	Best Use Case
Phone Call	No	Slow	High	Not recommended
Voided Check	No	Fast	High	Legacy processes
Pre-Note	Partial	Slow	Medium	ACH onboarding
Micro-Deposits	Yes	Medium	Low	Small vendor bases
API / Third-Party Tools	Yes	Instant	Very Low	Enterprise & scale

Third-Party Tools for Vendor Bank Account Ownership Validation

Automated third-party tools reduce manual effort and fraud exposure.

Common Capabilities

• Account ownership verification
• Routing and account validation
• OFAC and sanctions screening
• Audit logs and reporting

Popular Solutions

• Early Warning – U.S. bank consortium ownership data
• GIACT – Ownership verification plus OFAC and TIN checks
• VendorInfo – Vendor onboarding and bank validation
• nsKnox – Pre-note based ownership validation, U.S. and global
• Trustpair / Trustmi – Multi-source global bank account validation

How ACHgenie Supports Vendor Bank Account Validation

ACH Genie provides automated bank account validation tools designed for U.S. payment workflows.

Capabilities include:

• U.S. routing (ABA) number validation
• Account Number verification
• Account ownership verification

These tools help reduce payment errors, prevent fraud, and improve operational efficiency.

👉 Learn more about ACH Genie’s bank account validation services

Best Practices for Vendor Bank Account Validation

Use Secure Communication Channels

• Avoid email for sharing banking details
• Use secure portals with encryption and multi-factor authentication

Perform Independent Verification

• Do not rely solely on vendor-submitted information
• Verify using trusted internal contacts
• Use phone numbers from official websites—not email requests

Monitor and Audit Regularly

• Review vendor banking data periodically
• Document validation procedures
• Maintain audit trails for compliance

Regular audits help identify discrepancies before fraud occurs.

Frequently Asked Questions

How can I validate a bank account?

You can validate bank accounts using:

• Micro-deposits
• Pre-note ACH verification
• Third-party automated validation tools
• API-based ownership checks

How do companies verify supplier bank details?

Most organizations combine:

• Secure vendor portals
• Independent verification
• Automated bank Account Validation tools

This layered approach minimizes fraud risk.

What is the most secure way to validate vendor bank accounts?

Automated ownership validation through APIs or trusted third-party services offers the highest security, speed, and auditability. 

ACHgenie will soon be offering automated bank account validation through APIs.

Download ACHgenie