Fortifying Check Deposit Fraud Defenses at the Teller Line
- Check deposit fraud is rising, with criminals targeting business accounts.
- Bank branches see most check fraud due to less staff training
- Better training and AI are key to stopping check fraud
Check fraud is on the rise across the United States, with metro areas emerging as key hotspots. The main reason is the concentration of businesses, as business checks are sought after by criminals. Typically, business or commercial accounts have more funds than personal accounts, and business accounts write more check payments than personal. Fraudsters are aiming to create several counterfeits and extract as much as they can.
You'd think that fraudsters would favor the faceless deposit channels such as mRDC or ATM for depositing stolen checks; data from NICE Actimize revealed that 51% of check deposit fraud is committed at the bank branch.
Unfortunately, frontline staff training has declined over the past decade for various reasons, meaning staff often misses the key indicators of check fraud.
Strengthening Your Front Line
A LinkedIn article by Southern Financial Exchange highlights the issue, noting importance of the "fundamentals and ensure our frontline staff are well-trained in proper check-handling procedures."
The article points out that the front line staff needs to do more than examine all checks carefully. There are several other red flags that they should look for, including:
- Unusual endorsements
- Visible alterations
- Counterfeit indicators
- Suspicious customer behavior, as seen with “money mules.”
View the full list here.
Additionally, the article provides details on what the staff member should do if they are unsure of a check's legitimacy, ensuring that everything is documented, and what to do if the check is confirmed as a fraudulent check.
Defense Against Check Fraud -- A Team Effort
Financial institutions must emphasize that combating check fraud is a collaborative effort. Proper training, well-defined policies and procedures, and a culture that encourages staff to escalate concerns to branch managers are crucial.
On the technology side, financial institutions need to have the proper tools available to detect both on-us and deposit fraud. Most financial institutions see hundreds to several hundred thousands of checks being deposited daily through various channels, and it's impossible for humans to review each of them. FIs should deploy AI technology to analyze transactional data and images of checks, sending suspected fraudulent items into a queue that can be reviewed by trained fraud analysts.
Check fraud continuing to be the top fraud challenge for financial institutions, so it's more important than ever to ensure that each component of the financial institution is doing their part.