Higher education institutions face growing pressure to protect financial resources in an increasingly complex threat environment. From student refunds and financial aid disbursements to vendor payments and payroll, colleges and universities process a high volume of financial transactions that can create opportunities for fraud when governance, oversight, and fraud prevention measures fail to adapt to evolving risks.
As fraud schemes become more sophisticated, business officers are taking a closer look at how payment-related risks are managed across finance, compliance, technology, risk management, and operational teams.
Why Higher Education Is an Attractive Target
Colleges and universities process large volumes of transactions involving students, employees, vendors, donors, and government agencies, often across multiple systems and departments. This complexity can make it difficult to monitor the full transaction lifecycle and identify gaps in oversight.
Among the many payment channels campuses manage, ACH transactions play a critical role in financial operations, supporting vendor payments, payroll, student refunds, and financial aid disbursements. As payment processes become more distributed, institutions should periodically evaluate whether monitoring, authorization, and validation controls align with today’s environment.
Emerging Threats Are Expanding Beyond Traditional Fraud
Fraud schemes are increasingly combining technology with social engineering techniques.
Business email compromise remains a common concern. Fraudsters may impersonate vendors, employees, or trusted business partners to request payments, change banking information, or gain access to sensitive financial data. Advances in artificial intelligence have made these attempts more convincing, enabling attackers to create realistic communications that closely resemble legitimate messages.
Educational institutions are also confronting payment-related exposures tied to student financial operations. Concerns surrounding ghost student fraud have drawn attention to vulnerabilities related to enrollment verification, financial aid disbursements, and student refund processes. While these schemes may differ from traditional payment fraud, they often expose weaknesses in the same financial controls and operational workflows.
Together, these risks demonstrate that fraud prevention must extend beyond payment systems and address the broader operational processes that support financial transactions.
Compliance and Fraud Risk Must Work Together
Higher education institutions must also navigate an evolving compliance landscape. Recent NACHA rule updates and other payment-related requirements have reinforced the importance of fraud detection, risk assessments, documented monitoring processes, and risk-based controls around payment operations.
For finance leaders managing staffing constraints and competing priorities, the challenge is strengthening controls and governance while minimizing unnecessary administrative burden for staff or students.
Compliance alone does not eliminate fraud risk. The most resilient institutions view compliance as one part of a broader strategy that connects policies, procedures, technology, employee awareness, internal controls, and governance.
Where Controls Often Break Down
Many fraud incidents occur when controls do not keep pace with operational changes.
Common areas of vulnerability may include:
- Inadequate segregation of duties
- Insufficient vendor validation procedures
- Weak approval workflows
- Limited monitoring of unusual transactions
- Inconsistent documentation practices
- Gaps between departments responsible for financial oversight
In some cases, institutions may have effective controls within individual departments but lack visibility across the broader transaction lifecycle. When information remains siloed, suspicious activity can be more difficult to identify and investigate.
Ongoing monitoring and periodic reviews can help institutions identify unusual activity, address control gaps, and respond more quickly when concerns arise.
Building a Coordinated Approach to Risk Management
Because financial fraud affects multiple areas of the institution, ownership cannot rest with a single department. Finance, technology, risk management, compliance, and student financial services teams all play a role in protecting payment processes.
Regular communication, shared risk assessments, and clearly defined responsibilities can help institutions improve visibility into emerging threats, strengthen internal controls, and respond more effectively when issues occur.
Some institutions address these challenges through internal reviews and governance initiatives, while others leverage independent assessments, fraud risk evaluations, and employee education programs to identify vulnerabilities, strengthen controls, and improve fraud awareness.
Questions to Guide Your ACH Fraud Preparedness Review
Because ACH fraud preparedness can vary based on an institution’s size, complexity and level of fraud-awareness maturity, leaders may benefit from starting with a few practical self-assessment questions:
- Do we have documented ACH fraud monitoring procedures?
- How do we validate requested banking changes?
- Who reviews unusual refund or disbursement patterns?
- Do we have a documented response plan when fraud is suspected?
Strengthening Payment Fraud Preparedness
As fraud tactics continue to evolve, institutions that regularly evaluate controls, strengthen governance, and foster collaboration across finance, compliance, cybersecurity, and operational teams will be better positioned to protect financial resources and respond to emerging threats.
Need help evaluating your institution’s payment fraud controls? Contact CBIZ to discuss how our team can help strengthen your fraud prevention, compliance, cybersecurity, and governance efforts.
Frequently Asked Questions
ACH fraud is an growing increasing concern for higher education institutions due to the high volume of vendor payments, payroll transactions, student refunds, and financial aid disbursements processed across multiple systems and departments. Without effective monitoring, banking-change validation, and internal controls, institutions may be more susceptible to fraud, business email compromise, and unauthorized transactions.
Higher education institutions can improve fraud prevention by reviewing payment processes, documenting monitoring procedures, validating banking changes, monitoring unusual refund or disbursement activity, and maintaining a response plan for suspected fraud. Collaboration across finance, compliance, cybersecurity, risk management and student financial services can further enhance visibility and reduce vulnerabilities within payment operations.
While NACHA compliance and ACH fraud monitoring are essential elements of a sound prevention program, compliance alone is not sufficient to prevent ACH fraud. Recent NACHA rule updates emphasize the importance of risk-based controls, fraud detection, transaction monitoring, and documented review processes. However, to more effectively mitigate fraud risk, institutions should align NACHA compliance efforts with broader governance practices, employee training, internal controls, and ongoing risk assessments.
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