Check fraud remains major threat

Despite declining check usage, check fraud continues to be a major and enduring risk factor for banks, says an analysis conducted by Bluepoint.

"Because check volumes continue to drop, financial institutions may be inclined to cross this off their 'to do' lists," says Bluepoint CEO Hal Tilbury. "But with dollar losses still near three-quarters of a billion a year, affecting about 90% of all financial institutions, this would be both premature and perilous."

Keeps on coming

Check fraud may also begin to rise in the future, with the dramatic upsurge in mobile deposit users—200% or more next year—and the rapid deployment of more secure EMV-chip cards.

For many institutions, in-branch loss prevention systems have not been integrated with remote and mobile capture points. In the near future, check fraud may become a more attractive target for fraudsters.

Bluepoint’s research concludes that:

• Playing for bigger stakes. Checks continue to be the predominant form of payment used by fraudsters by a substantial margin, and risks per transaction have become proportionately greater, since the average check amount is substantially higher than for debit or credit cards.

• Electronics expose paper payments. Rising remote deposit and mobile banking rates may once again make checks an attractive target for fraudsters.

• No letting up. Financial institutions need to exercise as much due diligence as ever in pursuing loss prevention strategies to protect their shareholders and account holders.

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