Check Fraud: The Corporate World Provides a Big Target

While the consumer “civilian” world has pretty much learned and accepted the “don’t take checks from strangers” rule, the corporate world is both slow to adopt that guideline — and often unable to. This is due to the fact that suppliers like the “float” advantage they enjoy with check payments. (“We paid you on Tuesday as per our agreement” means you indeed got a piece of paper on Tuesday that will take a few days to actually impact their financial institution, so the transaction is not actually complete for days following the receipt of the check — see Corporate Banking Customers Stick With Checks – Can You Guess Why?)

A reluctance among corporations to make instances of check fraud public, along with the media’s focus on consumer payments fraud, are two of the primary reasons why Heather Campbell, digital marketing & content manager at TROY Group, said B2B check fraud continues to fly under the radar:

“Companies keep quiet, so media outlets don’t know this is a huge issue,” she told PYMNTS in a recent interview. “On the consumer side, if you don’t know who it’s from, you know not to cash the check. You hear that a ton. But look at the business side, it’s very hush-hush.”

The surprise: Only 10 percent of executives said they were concerned with check fraud! What’s on their minds?  70 percent of survey respondents reporting cybersecurity risks to be a top concern.

While not minimizing the cybersecurity threat, it’s important to realize just how important check writers are on the consumer and corporate side. A recent BAI Banking Strategies Executive Report outlines some impressive statistics:

  • Account holders with annual income of $150,000 and up tend to write multiple checks monthly, according to The Financial Brand.
  • Frequent check writers acquire roughly five financial products and services from their primary financial institution—two more than non-check users.
  • Primary financial institutions win approximately 50 percent of new product sales.

Bottom Line: Checks remain strong in the consumer and corporate realms, and it’s paramount to deploy a fraud solution that utilizes image and transaction analysis to mitigate the risk of check fraud.

 

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