ABA Podcast: “60% of Fraud Attacks and Losses Associated with Check Fraud”
- Check fraud looms large for financial institutions
- Post offices and carriers are targets of check theft
- A holistic solution is the best approach
Yes, you read the title right.
In a new podcast from the ABA, Glenn Fratangelo, Director, Product Marketing, NICE Actimize, opens the interview with Patrick Smith, SVP, Fraud Operations, ABA, with the following:
"Check fraud is a significant threat to financial institutions and companies. We have some clients reporting that almost 60% of fraud attacks and losses are associated with check fraud."
Mr. Fratangelo explains that because of "low-tech" nature of checks, the prevalence of their usage in society (personal and business), and the lack of security when mailing them, checks make an easy and favored target for criminals. He explains via a real-life experience:
"Just yesterday I was walking into the local Walgreen's -- post-person was there, saw their truck and drove up next to it, and their windows are wide open with a big old stack of mail."
Listen Here: Check Fraud: Old Threads are Modern Trends Podcast
A Holistic Approach
"The prevalence of checks is making all kinds of check fraud possible." Year over year, Mr. Fratangelo said, NICE Actimize has seen increases in check fraud events and the value of the average check fraud loss.
"It means the total amount of check fraud is increasing even if the volume may not because it is being 'off-put' by the use of checks, so you only have to think that, 'Yes, maybe the volume of check fraud may be stabilized... but the actual value or total fraud dollars associated with checks has grown.'"
Mr. Fratangelo also noted that a lot of financial institutions are using legacy solutions, or they have just "layered onto" or added to legacy solutions.
"You really need a holistic solution that blends machine learning with analytics, and have an overall, holistic view of fraud." said Mr. Fratangelo.
This is the approach that was expressed by OrboGraph's Marketing Manager and Check Fraud Detection Specialist James Bi during a speaking engagements in 2024 -- where over a dozen payment and banking industry associations, including ABA, ECCHO, Wespay, NEACH, UMACHA, Macha, Southern Financial Exchanges, requested that Mr. Bi speak at their in-person and virtual events.
During these presentations, Mr. Bi explained that there is "no single technology that can detect a majority of check fraud." This is why financial institutions need to take a multi-layered technology approach, deploying complementary technologies including behavioral/transactional analysis, image forensic AI, rules engines, consortium data, and dark web monitoring. All the results from these technologies are funneled into a single review platform where fraud analysts can review check transactions with all the data to make the final determination if the check is fraudulent.
As we flip the calendar from 2024 to 2025, will this be the year that FIs finally catch up to the fraudsters? Let us know in the comments below.