Three emerging check fraud trends and how to stop them
By Jill Cacic
When was the last time you wrote a check? We’ll wait …
While you may not have written a check in a while, businesses still rely on checks as one of their top forms of payment, which makes them a lucrative source for check fraud. Those accounts tend to have more money and/or higher limits than personal accounts. There is also usually more than one signee assigned to those accounts, making them more susceptible to fraud.
Additionally, the access to new technology to create realistic counterfeit checks continues to make check fraud one of the largest forms of fraud in the world. (Now would also be a good time to look for your checkbook. Fraudsters don’t need to make a counterfeit version if they have the real thing.)
According to the ABA’s 2017 Deposit Account Fraud Survey Report, banks stopped $17 billion in fraudulent transactions in 2016, 35% of which were check fraud. (Financial institutions also stopped almost $6 billion of that $17 billion from getting paid out, so give yourselves a pat on the back!)
The 2017 Association for Financial Professionals’ Payments Fraud and Control Survey reported that 75% of financial institutions experienced check fraud in 2016, up from previous years. More than 31% of those institutions said they experienced over 15 incidents of check fraud.
One would think that as technology improves so would the safeguarding features around monetary transactions. Mobile depositing of checks, for example, has actually made check fraud easier. A growing fraud issue is duplicate deposits of those checks. Fraudsters cash the same check twice — once via mobile deposit and once in the bank branch months later, making off with double the money if institutions aren’t vigilant.
As mentioned before, these scammers are also using high-tech devices to their advantage, printing fraudulent checks from top-of-the-line printers making them look legit to the untrained eye.
Check fraud still appears in traditional forms, including basic counterfeit checks, forging checks, paperhanging (writing a check from a closed account) and check kiting (“floating” a check from one low- or no-balance account to another to cover payments). Yet, emerging check fraud trends are important for you and your staff to be aware of in order to protect both your financial institution and your customers.