Easier ways to send and receive payments? Check!
The need to write and send paper checks dwindling? Check!
Check fraud becoming a relic of the past?
Umm, not so much…
The reality is, check fraud shot up a mind-blowing 96% in 2022 according to the Suspicious Activity Report Statistics (SAR Stats) from the U.S. Treasury Financial Crimes Enforcement Network (FinCEN). SAR Stats revealed that banks filed 680,000 check-fraud reports in 2022 compared to just 350,000 the previous year.1
Fraudsters are finding new and creative ways to commit check fraud and avoid detection with counterfeit or altered checks, overpayment scams and duplicate deposit of the same check at different financial institutions (FIs) and through multiple channels.
Banks, credit unions and their consumer customers aren’t the only victims of check fraud. Businesses ranging from mom-and-pops to multi-national corporations are prime targets, which is no surprise since checks are still used for many B2B and B2C transactions and bad actors find the often-larger amounts irresistible.
The 2023 AFP Payments Fraud and Control Survey reports that in 2022 “checks continue(d) to be the payment method most vulnerable to fraud, with 63% of respondents reporting their organizations faced fraud activity via checks.” It also highlights that 80% of the organizations impacted by fraud are looking for guidance from their banking partners.2
So how can banks, credit unions and treasuries more effectively detect and prevent check fraud while still delivering a great customer experience?
Data insights.
FIs using Verify Deposit (formerly known as Real-time Deposit Chek® Service) from Early Warning® to screen check and ACH deposits receive comprehensive insights in real-time that empower them to quickly assess risk with high accuracy. They receive advanced account and item-level responses including account status, type of account (AOA only) and a risk score to help them determine the potential risk of accepting an incoming deposited item.
Banks and credit unions of all sizes are employing the solution in their teller, ATM and/or remote deposit capture (RDC) channels to detect check fraud and minimize deposit fraud losses.
In 2022, Early Warning alerted its customers to $10.2 billion in high-risk checks
- A national bank with 7+ million DDAs received $280 million in total high-risk check alerts
- A regional bank with 1-7 million DDAs received $125 million in total high-risk check alerts
- A regional credit union with under 1 million DDAs received $42 million in total high-risk check alerts3
All Early Warning® Platform solutions, including Verify Deposit, leverage the National Shared DatabaseSM resource. Based on a give-to-get model, it houses an expansive set of deposit performance data contributed by over 2,500 banks and credit unions. It includes scored account data on 655 million deposit accounts, 596 million account owners and 10.9 billion annual transaction records.
The real-time insights FIs receive not only help them mitigate fraud, but also expedite funds availability for their trustworthy customers. And the ever-expanding National Shared DatabaseSM resource enables us to continuously evolve our models to more effectively predict the likelihood of fraudulent activity.
If you haven’t already, explore how Early Warning can help your FI detect check fraud, minimize losses and deliver a better banking experience for your customers. For over three decades we’ve been a trusted partner helping thousands of banks and credit unions like yours make confident decisions, mitigate fraud and enable payments.
Fraudsters love your omnichannel approach! Learn 3 ways your FI can leverage predictive intelligence to squash deposit fraud. Read the white paper
1. U.S. Treasury Financial Crimes Enforcement Network, Suspicious Activity Report Statistics (SAR Stats), 2023
2. 2023 AFP Payments Fraud and Control Survey, Association for Financial Professionals, 2023
3. Early Warning analysis of 2022 Verify Deposit Risk inquiries: High-risk categories include high-risk account status contributed by participating financial institutions, duplicate or counterfeit check alerts, Participant Model high-risk scores (720-799), Treasury high-risk on treasury checks, and Scored Accounts high-risk scores (420-499)