Check Fraud on the Rise Despite Anti-Scam Efforts, ABA Says

US banks prevented 90% of attempted fraud against deposit accounts in 2018, according to a new report from the American Bankers Association (ABA).

Fraud attempts affected an estimated $25.1 billion of money held in deposit accounts, ABA’s survey found, with $22.3 billion protected.

The bulk of fraud losses were to check fraud, which accounted for $1.3 billion (47%), and debit card fraud, which accounted for $1.2 billion (44%). The remainder was from electronic transactions such as P2P transfers and wire transfers.

Check fraud attempts totalled $15.1 billion, or 60% of the 2018 total, the ABA found, with fraudsters using strategies such as counterfeit checks and forged signatures.

“Sometimes, what’s old is new again as we’ve seen criminals gravitate back toward check fraud,” said Paul Benda, senior vice president for risk and cybersecurity policy at ABA. “Fortunately, banks are well-equipped to catch this type of fraud and do it successfully day in and day out.”

ABA president and CEO Rob Nicholas added that banks were making “extraordinary efforts to protect and safeguard customer accounts” as fraud efforts became more sophisticated.

Survey respondents predicted that online frauds and scams would become more prevalent in the next 12 months. They highlighted phishing emails, business email compromise schemes, internet job scams and “social engineering” as areas of concern. The latter refers to the manipulation of individuals to encourage them to give up security information or act as money mules, for example.

Benda said: “It’s important to remember that bank customers are protected against losses. When a customer reports an unauthorized transaction, the bank will take measures to recover the loss and protect the account.”

The ABA surveyed 151 institutions between May and September 2019. 

The association has encouraged customers to be vigilant against scammers by not sharing account information or social security details online or over the phone, and shredding sensitive documents before throwing them away.

Regularly monitoring accounts and credit reports and protecting mobile devices were also important, the ABA said.

Data from Javelin Strategy & Research published last year showed that overall financial fraud rates fell by 15% in 2018 compared to the previous year, with 14.4 million victims in total. The research company cited a decline in card fraud as a key driver of the reduction.

The ABA’s research echoed this finding, with counterfeit cards accounting for 25% of total losses in 2018, down from 47% in 2016.

However, Javelin also reported a sharp increase in instances of “new account fraud”, in which scammers open a new account in a customer’s name. There was also an increase in the number of reports of mobile phone account takeovers.