90% of Check Fraud Caught Across the Banking Industry…Is the Estimate Too High?
- Check fraud attempts remain high
- Claims of 90% check fraud detection rates across the industry are likely too high
- Technologies like pattern recognition and machine learning significantly reduce check fraud
Check fraud continues to make headlines, but the true impact—and the relative effectiveness of prevention measures—are often misunderstood. A recent LinkedIn article, “Check Fraud: How Big a Bite Is It Taking From Your Bottom Line?” authored by Digital Check Corp., breaks down the numbers and offers practical strategies that every business should be aware of.
They note that, despite increased adoption of card payments and ACH transfers, checks remain a staple for many transactions, leaving some organizations exposed. According to the Federal Reserve, Americans wrote $27.4 trillion worth of checks last year -- but how much is actually lost to fraud?
Estimates vary widely:
- The American Bankers Association placed annual check fraud losses at $1.3 billion (using data from 2018)
- A more recent NASDAQ report suggests losses closer to $24 billion across the Americas
Unfortunately, as the article notes, there is no concrete data that provides an accurate amount of check fraud.
Unfortunately, there’s no methodology listed for that figure, so we don’t know for sure. An educated guess says that $20 billion would be a high check fraud number for the U.S. alone, but is it 90 percent too high? We don’t know.
90% of Check Fraud Caught?
The article suggests that 90% of check fraud is caught by banks (still accounted for in the total amount of check fraud). But, is that rate too high? In our graph below, we can see the surge in check fraud started in 2017/2018:
Each individual bank -- even each individual branch -- had a unique experience. As we've noted previously, check fraud appears to be regional, meaning that all banks did not feel the same urgency to adopt the latest check fraud detection technologies, so we cannot assume widespread adoption. In fact, the demand for check fraud detection technologies is still booming today -- from large financial institutions to community banks. And, it's not because these financial institutions are looking to get "ahead of the curve."
Can financial institutions achieve 90% detection rates? Certainly. That should be, in our opinion, a minimal expectation. However, many financial institutions that have deployed technologies like image forensic AI are seeing detection rates of 95%+ -- with one of OrboGraph's partnered banks achieving 100% detection rates.
Financial institutions of all sizes can see similar results by layering a multitude of technologies that work harmoniously to detect counterfeits, forgeries, and alterations. From transactional to image-based AI, the technology is proven and readily available for all financial institutions -- from those heavily affected to the ones that have yet to see fraudsters enter their region.
For further insight, read the full article on LinkedIn -- and remember: Smart technologies like OrboGraph are your best ally in the fight against check fraud.
