With financial losses from fraud continuing to rise and organizations facing increasingly sophisticated attacks, handling the aftermath effectively has never been more important.
The FTC reports that fraud losses jumped to $12.5 billion in 2024—a 25% increase from 2023. More concerning still, over half of financial institutions report rising business fraud attempts, and 25% experienced losses exceeding $1 million.
So what happens when prevention fails and you find your organization victimized? Let's walk through the practical steps you can take to recover, while acknowledging an uncomfortable truth: recovery is often difficult, expensive, and incomplete.
⚡️ The Critical First 24 Hours
Secure Your Business Perimeter
First things first:
- Call your bank's fraud department directly – don't wait for business hours
- Freeze affected accounts immediately while maintaining operational accounts
- Change all financial system credentials and disable compromised access points
- Implement emergency transaction approval protocols for continuing operations
Document Everything – And We Mean Everything
- Take screenshots of your transaction history showing unauthorized activity
- Preserve system logs showing access patterns and anomalies
- Secure email trails that might contain evidence of social engineering
- Create a detailed timeline of events leading up to and following discovery
This documentation isn't just for your internal investigation – it's essential for working with banks, insurers, and potentially law enforcement.
Alert the Right People
Who needs to know right now, and who can wait until morning? You'll need to notify:
- Your executive team and board (depending on materiality)
- Your financial institution's fraud department
- Your cyber insurance provider, if applicable
- Law enforcement for significant fraud cases
- Legal counsel to begin response planning
Have you designated a specific person to coordinate these communications? If not, this is something to address in your post-recovery planning.
⚡️ Working With Financial Institutions
Banks can be your strongest ally in fraud recovery – or a source of frustration. How do you ensure it's the former?
Understanding the Bank's Perspective
Here's something most advisors won't tell you: banks operate under strict timelines for fraud recovery that vary by payment type. Did you know that:
- Wire transfer recalls often have just a 24-hour window for potential recovery
- ACH transactions typically allow 48-72 hours for disputes
- Check fraud investigations can take 30-90 days
- Credit card chargebacks follow entirely different timelines and rules
Are your finance teams aware of these critical deadlines? Missing them can be the difference between recovery and writing off the loss.
Speak Your Bank's Language
Banks handle countless fraud reports daily. How do you make yours a priority?
- Assign a single point person who understands banking procedures
- Provide precisely formatted documentation that matches their requirements
- Escalate to relationship managers for significant events
- Request provisional credits during extended investigations
- Follow up consistently without becoming adversarial
Remember that fraud investigations are fundamentally relationship exercises. The quality of your banking relationship before the fraud often determines the level of effort expended to help you recover.
When Multiple Financial Institutions Are Involved
What happens when funds move across multiple banks? This is where recovery gets exponentially more complex.
Each institution has different procedures, timelines, and levels of cooperation. Consider establishing a coordinated approach through your primary bank, rather than pursuing parallel recovery efforts that might actually interfere with each other.
⚡️ Legal Remedies: Promise vs. Reality
Legal action offers the promise of making your organization whole – but comes with significant caveats every business should understand.
What Legal Options Do You Have?
Depending on the fraud type, you might consider:
- Civil litigation against identifiable perpetrators
- Asset freezing orders when fraudsters are known
- Receivership appointments for recovering dispersed assets
- Claims against negligent third parties who facilitated the fraud
- Professional liability claims when applicable
Each path comes with different costs, timelines, and probability of recovery.
The Hard Truth About Legal Recovery
Here's what most lawyers won't tell you up front: the recovery math often doesn't work in your favor.
Why? Professional fraudsters typically disperse funds immediately. Even when you win judgments, collection can be nearly impossible. Add legal costs that frequently exceed 30% of potential recoveries, and multi-year timelines that drain resources and attention, and the picture becomes clearer.
Is this reason not to pursue legal remedies? Not necessarily – but it's crucial to have realistic expectations and clear cost-benefit analysis.
Maximizing Legal Recovery Potential
If you do pursue legal avenues, consider:
- Acting within days, not weeks, especially for freezing orders
- Working with attorneys specializing in business fraud recovery
- Exploring contingency arrangements when appropriate
- Leveraging your insurance coverage for legal expenses
- Coordinating legal efforts with law enforcement investigations
Have you calculated not just the hard costs but also the opportunity costs of lengthy legal proceedings? For some businesses, the distraction factor alone can outweigh potential recoveries.
⚡️ Rebuilding Your Security Fortress
Learning From the Breach
The best organizations view fraud as expensive education:
- Conduct a no-blame assessment of exactly how the fraud succeeded
- Identify all exploited vulnerabilities – technical and human
- Evaluate why detection systems failed or delayed
- Review separation of duties and approval workflows
- Assess third-party security interfaces if relevant
Have you created an environment where teams can share security learnings without fear? Without this psychological safety, the most important insights often remain hidden.
Implementing Practical Enhancements
Based on your findings, strengthen your controls:
- Restructure approval workflows for high-risk transactions
- Implement or enhance anomaly detection systems
- Review and tighten vendor management procedures
- Revise payment verification protocols, especially for changes
- Upgrade authentication systems where needed
The key is proportionality – implementing controls that address real risks without creating operational friction that drives workarounds.
Creating a Responsive Recovery Framework
The next fraud attempt (and there will be one) should find you better prepared:
- Develop a detailed fraud response playbook with clear responsibilities
- Establish relationships with forensic specialists before you need them
- Create communication templates for various stakeholders
- Train finance teams on the specific recovery procedures for each payment type
- Regularly review and update your cyber insurance coverage
Ask yourself: if fraud occurred tomorrow, would your team know exactly what to do in what order?
⚡️ Prevention: The Recovery You'll Never Need
Consider this: typical fraud recoveries return pennies on the dollar, with complete recovery being exceptional rather than expected. Even partial recoveries come with substantial costs – investigation expenses, legal fees, operational disruption, and reputational damage.
This is why we've built a different approach.
Rather than focusing on recovery tactics, Basefund prevents fraud from succeeding in the first place by:
- Implementing intelligent authorization controls across payment channels
- Creating a unified flow of funds for visibility and control
- Delivering real-time alerts with actionable notifications
- Integrating seamlessly with your existing financial systems
The reality is stark: according to industry research, organizations typically recover less than 25% of fraud losses, with recovery efforts often extending beyond 18 months. Those statistics aren't just numbers - they represent significant business disruption, employee time, and resources diverted from core operations.
The Bottom Line
If you're reading this because your organization has already experienced fraud, we hope these recovery strategies help maximize your potential for recovery. The path isn't easy, but structured approaches improve your odds.
But if you're reading this proactively, it's time to take a preventitive approach to fraud. Want to learn how Basefund can help protect your organization.
