The increasingly digital nature of financial transactions and the growing prevalence of fraud require consumers and businesses alike to be equipped with the knowledge to navigate day-to-day business securely.
The Federal Trade Commission (FTC) reports that U.S. consumers lost more than $7 billion during the first three quarters of 2023, up 5% compared to the same period in 2022. Check fraud alone, the most significant current fraud threat, is projected to create losses of $24 billion in 2024.
Fraudsters have adjusted their tactics as technology has changed. From check washing, phishing emails, and pig butchering to identity theft, fraudsters are employing a variety of tactics to exploit unsuspecting victims who use traditional and emerging forms of banking. As financial transactions become increasingly digital, consumers and businesses must be equipped with the knowledge to navigate day-to-day business securely. At the same time, it is important not to deter clients from using digital banking methods for daily transactions.
Effective fraud risk management includes detection and fraud monitoring that should consider customer or member history and behavior. It also requires processes and systems that enable timely and effective responses to fraud. The OCC has said that customer education on fraud risks and prevention is an example of the preventive controls that should be deployed in combination with detective controls as part of sound fraud risk management.
The stakes for financial institutions to protect customers and members are higher than ever. Fraud-related losses, reputation damage, and added expenses all affect the bottom line.