CAI-NJ November 2025

A COMPLETE COMMUNITY EFFORT — Protecting Your Association from Fraudulent Activity By Michael Luzzi, CIRMS, CPIA, EBP, Acrisure

W e have all received the email, text notification or phone call asking if a recent transaction is legitimate. Your heart sinks. Hopefully, it was caught with minimal disruption, funds are returned, the transaction stopped, or a new card is sent to you. Unfortunately, this is becoming all too common place and for community associations it is not always that simple. When an association has fraud or theft, the circumstances are often much more complicated. Proactive measures can be taken to reduce the threat and it is important to have the proper insurance in place when the efforts are successful. It is imperative that the association, board, manager, and management company all work together with their business partners, bank, and insurance professionals to prevent the outside threat. Implementing best business practices can prevent almost all community association crime and fraud claims according to some experts. Most insurance brokers have access to marketing information from carriers that associations can review and use for these procedures. Thousands of checks and ACH transactions are pro cessed by individual management companies on an annual basis. This puts sensitive account information into the world that can fall into the wrong hands. Checks con tain routing numbers, account numbers, signatures, check numbers, addresses, etc. ACH payments include routing

and account numbers. All of these items which are needed to make a payment, can be easily manipulated to commit fraud. It is important to know that while a management company has their own crime/fidelity insurance, almost all community associations are required to carry their own by either their management contract or governing documents. These policies are inexpensive and can protect the associ ation’s assets from outside or even inside threats. An Association’s Role: As individual unit owners, it is important that homeowners learn the safest and most secure ways to make payments. Gone are the days of electronic payments being more dangerous than hard mail. Most people do not realize that check fraud has boomed since the pandemic along with the other types of exposures. Technology advancements allow for more types of threats to emerge. Inquire with your management company as to the options provided to them. If it seems complicated, or over whelming, ask for help. A Board’s Role:

A Board has multiple responsibilities including, but not limited to, ensuring that the association has the proper level and types of insurance. Work with your profession

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NOVEMBER 2025