Check fraud is helping drive up financial fraud

We have all seen the news: card skimmers, check fraud and compromised accounts. With financial fraud on the rise, where does your financial institution stand in terms of losses, security and products to assist you in safeguarding your accounts and identity?

The American Bankers Association does a survey each year to determine the amount of fraudulent transactions against deposit accounts. In 2018 the total amount of fraudulent transactions was 25.1 billion, up from 19.1 billion in 2016. 

The addition of EMV chips has slightly decreased the amount of debit card fraud to 44%. However, losses incurred by check fraud — the payment method targeted most often — increased to 47%, while losses attributed to electronic banking transactions trailed at 9%.

With recent data breaches and the presence of skimmers, businesses have become more conscious of the risk associated with fraud and identity theft.

Often, businesses do not consider checks to be as great of risk. However, as the numbers above show, the risk is greater.

Check fraud may not receive the media attention that credit/debit card, tax fraud and Social Security fraud do, but it is a big problem for U.S. companies.

A study by the Association for Financial Professionals found 71% of businesses surveyed in 2015 experienced actual or attempted check fraud.

Technology is a big reason check fraud remains such a significant crime.

Criminals can easily use a personal computer, software, and a high-quality color printer to produce realistic-looking checks that can often escape detection.

After all, businesses use the same tools to create legitimate checks for payment.

Additionally, because checks contain the following critical information criminals can mimic legitimate checks which helps them elude detection:

  • Business name
  • Address
  • Phone number
  • Bank name and address
  • Bank account and routing numbers
  • Signature

There are many steps one can take to lessen their exposure to fraud. Below are a few to consider:

  • Protect your checks.
  • Monitor your bank account for fraudulent transactions, including check washing where the dollar amount has been altered.
  • Consider enrolling in a check verification program such as Positive Pay

Turn on notifications that alert you to transactions such as deposits and withdrawals that exceed set limits.

  • Reduce the number of checks you write by enrolling in cash management services and utilizing ACH transactions to pay vendors and employees.
  • Download an app that allows you to turn your debit card on and off as needed, keeping it safe from skimming when not in use.
  • Turn on texting services to advise you when dollar amounts are exceeded, along with the transaction type and geographic location.

Criminals are being creative and aggressive in committing fraud.

Protect your business by implementing these safeguards on your account. It takes a lot less time to implement these safeguards than it does to close an account that has been compromised.

Antoinette Burnside is assistant vice president and product manager for Kennewick-based Community First Bank and HFG Trust.

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