2009 Association for Financial Professionals Webinar: Against the backdrop of deteriorating financial conditions, especially in the second half of 2008, a significant number of organizations were subject to payments fraud attempts. Hear the findings of the 2009 AFP Payments Fraud & Control Survey. Learn about real-life fraud attempts, the counter-measures that corporate practitioners are taking, and the diligence that must still be utilized to guard against check, ACH and card payments fraud.

1. on the Rise: How Corporates
Can Fight Back
Highlights of the 2009 AFP Payments Fraud & Control Survey
Don Hollingsworth, Ameren Corporation
Nasreen Quibria, Association for Financial Professionals
May 28, 2009

2. Agenda
Introduction
Survey Methodology
Fraud Attempts & Losses by Payment Method
Risk Mitigation Tools
Final Thoughts

3. Introduction
• The Association for Financial Professionals (AFP) serves a network
of more than 16,000 treasury and finance professionals.
Headquartered in Bethesda, MD, AFP provides members with
breaking news, economic research and data on the evolving world
of treasury and finance, as well as world-class treasury certification
programs, networking events, financial analytical tools, training,
and public policy representation to legislators and regulators.
• In Payments … AFP seeks to promote greater awareness of actions
that payments system participants can take to guard against the
fraud that can undermine their organization’s security and financial
controls as well the safety and soundness of the U.S. payments
system.

4. Introduction
Ameren Corporation (NYSE: AEE)
• Based in St. Louis, among largest investor-owned electric
& gas utilities in U.S.
• Serves 2.4 million electric & one million natural gas
customers across 64,000 square mile area of Missouri
• Owns more than 16,000 megawatts of generating
capacity
• Operates non rate-regulated generation, development,
marketing & fuel service companies

5. Survey Methodology
• Annual survey conducted since 2005
• Online survey
• 629 companies with annual
revenues ranging from below $50
million and above $20 billion were
surveyed in January of 2009

6. Attempted or Actual Payments Fraud
80%
72% 71% 71%
68%
70%
60% 55%
50%
40%
30% 24%
20%
10% 6%
0%
-1%
0%
2004 2005 2006 2007 2008
-10%
Attempted or Actual Payments Fraud % Growth
Almost three-quarters of organizations experienced attempted or actual payments fraud.

7. Fraud Attempts & Losses by Payment Method
Subject to Suffered Financial Responsible for
Payment Method Fraud Loss from Fraud Greatest Financial Loss
Check 91% 47% 60%
ACH 17%
ACH Credits 7% N/A 3%
ACH Debits 28% N/A 5%
Corporate/Commercial Cards 14% 44%/17%* 10%
Consumer Cards (Debit/Credit) 18% N/A 20%
Wire 6% N/A 1%
N/A - Data was not collected in the survey
*Of organizations subject to fraud, in using own corporate/commercial cards to make payments 44% of organizations suffered a
financial loss; only 17% or one out of six organizations suffered a financial loss from accepting corporate/commercial cards

8. Corporate Experience
• Credentials used to redirect vendor checks
• “Secret Shopper”
• “Phishing and “Whaling”

9. 72%
Check Fraud 59%
27%
• Types of Check Fraud
Counterfeit Payee name Loss, theft or
checks (other alteration on counterfeit of
than payroll) checks issued employee pay
with the checks
organization’s
MICR line data
• 44% of organizations use Remote Deposit Capture;
1% of those organizations were subject to fraud from
the service
• Twenty-two percent of organizations have been
contacted by a third party claiming to be a “holder in
due course”

10. Origins of Card Fraud
Unknown external party
Internal Party
Third-party or outsourcer
32% Employee
70%
11%
78%
Outside Party

11. Cost of Cards
Organization Suffering Loss Percentage
My organization 44
Merchant 42
Card issuing bank 33
Card processor 14
No organization suffered financial loss 11
Other 14

12. Reason for Financial Liability from
Accepting Cards
83%
90%
80%
70%
50%
60%
50%
33% 33%
40%
30%
20%
10%
0%
Card-not-present Did not authenticate Delayed chargeback Other
merchant assumes cardholder (e.g., response
liability cardholder’s address)

13. Estimated Median Value of Payments Fraud
$30,000 0.2
$26,600
$25,000 $23,300 9% 0.1
0
$20,000
$15,200 -0.1
$15,000 $13,900
-12%
-0.2
$10,000
-0.3
$5,000 -0.4
-40%
$0 -0.5
2004 2006 2007 2008
Estimated Median Value of Payments Fraud % Growth
The median financial loss from payments fraud in 2008 was $15,200.

14. Risk Mitigation Tools
Payments
Revenues Revenues
All over $1 under $1
Respondents billion billion
Positive pay/Reverse positive pay 82% 87% 79%
Checks
Payee positive pay 50% 60% 41%
“Post no checks” restriction on depository accounts 34% 42% 29%
ACH debit blocks 71% 79% 60%
ACH debit filters 55% 62% 49%
ACH
ACH positive pay 19% 19% 18%
Universal Payment Identification Code for ACH credits 5% 7% 3%
Other
Other 5% 4% 5%

15. Internal Processes Best Practices
• 86% stopped providing payment instructions by phone or fax
(percent)
• 82% increased use of electronic payments for business-to-
consumer and business-to-business transactions
• 82% reduced the number of bank accounts
• Organizations also use of separate accounts for different payment
methods as a fraud control technique:
– 75% of organizations maintain separate accounts for different
payment methods and types.
– 71% have separate accounts for disbursement and collections
– 60% of organizations have separate bank accounts for checks and ACH
payments.

16. Final Thoughts
Fraud will always be around, but corporates can
mitigate risk via:
• Use of financial institutions anti-
fraud services
• Implementation of tight internal
controls
• Constant vigilance

17. Thank you…
Don Hollingsworth, CTP Nasreen Quibria
Assistant Treasurer Director, Payments
Ameren Corporation Association for Financial Professionals
P: 314.554.2838 P: 301.961.8676
E: dhollingsworth@ameren.com E: nquibria@afponline.org