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AML/CFT Advisory Services AML Training Financial Crime Fraud Prevention Check Fraud Fraud Trends

What FIs are most concerned about when it comes to check fraud prevention

Kate Randazzo
February 22, 2024
Read Time: 0 min

Check fraud prevention is at the forefront for financial institutions

Banks and credit unions report that check fraud is impacting their institution more than any other threat. Read on for cutting-edge prevention methods. 

You might also like this webinar on Homeland Security fraud investigations.

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Takeaway 1

Check fraud prevention is top-of-mind for nearly 75% of financial institutions, with many reporting significant increases last year.

Takeaway 2

Many fraud teams feel overwhelmed, citing  staffing capacity as a barrier to prioritizing check fraud prevention.

Takeaway 3

AI and machine learning tools can help banks and credit unions reduce staff burden and increase accurate detection.

4 statistics

Poll responses highlight the need for check fraud prevention

Abrigo polled banks and credit unions who attended a webinar about their AML/fraud concerns for 2024. The results indicated that check fraud is a growing concern for institutions, with more than half reporting significant increases. Despite this alarming trend, many institutions cite resourcing and the capacity of their fraud team as the main hurdles keeping them from prioritizing check fraud defense.

Most financial institutions also reported that check forgeries and counterfeits were the fraud schemes that impacted their organizations the most in 2023. These statistics highlight the need for institutions to invest in tools like fraud detection software to combat check fraud and protect their customers.

73% of institutions said check fraud is top-of-mind at their organization

Warnings about the high prevalence and high costs of check fraud have been frequent in the media and emphasized by regulatory agencies. Perhaps some of the rise is due to the challenging economy, which can exacerbate conditions that experts refer to as the fraud triangle fundamentals—pressure, opportunity, and rationalization. These conditions can increase the likelihood of all types of fraud. And with 81% of businesses still paying other firms with paper checks, checks remain the most common form of B2B payment — and will likely be exploited by fraudsters for years to come.

60% of institutions said they saw a more than 25% increase in check fraud last year

It's not only a concern, it's a reality. Abrigo polling found that 60% of financial institutions saw a more than 25% increase in check fraud at their institution in the past year. In the same poll, 25% of financial institutions saw an even larger increase of between 50%-75%. Other sources concur that this type of fraud is increasing dramatically. According to fraud strategists, check fraud is projected to soar to $24 billion in 2024, and FinCEN reported that Suspicious Activity Report (SAR) filings for checks 2022 exceeded 680,000, nearly doubling the number of filings the previous year.    

Fraud impacts your reputation, your customers, and your bottom line. Learn more about its snowball effect with this infographic: "Beyond immediate fraud losses."

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67% of institutions said resources and team capacity were the main hurdles keeping them from prioritizing check fraud defense 

Fraud teams are often overwhelmed by the volume of checks and other transaction types that need their attention. One way to alleviate the burden of manual processes is to leverage artificial intelligence (AI) and machine learning (ML) to automate and enhance check fraud detection. AI and ML can help institutions analyze large volumes of data, identify patterns and anomalies, and flag potential fraud cases in real-time. By using AI and ML, fraud teams can reduce false positives, increase accuracy, and save time and money on manual reviews. Other tech advancements, such as the ability to text customers to confirm unusual transactions, can also make fraud teams’ lives easier.

If staff capacity is a barrier to better prevention at your financial institution, consider upgrading your technology and investing in more streamlined, efficient processes for your fraud department. Comprehensive platforms like Abrigo Fraud Detection can also help improve workflows, which saves time, increases efficiency, and helps staff prioritize higher-risk activities. 

76% of institutions said check forgeries and counterfeits impacted their organizations most in 2023

Fraud counterfeit and forgery methods have improved along with technology, and financial institutions' detection methods need to be able to keep up. Emerging technologies such as AI and ML can help by quickly identifying patterns and anomalies that detect check fraud. These tools have the potential to revolutionize check fraud prevention by analyzing large amounts of historical and real-time data, AI and machine learning can identify patterns and anomalies that indicate possible fraud, such as unusual check amounts, locations, or frequencies. AI and machine learning can also use image analysis and natural language processing to verify the authenticity and consistency of the check images and text, such as signatures, dates, payees, and amounts

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About the Author

Kate Randazzo

Content Marketing Manager
Kate Randazzo is a Content Marketing Manager at Abrigo, where she works with industry thought leaders to create digital content that helps financial institutions better serve their customers. Before joining Abrigo, Kate managed social media and produced articles for Campbell University’s quarterly magazine and other university content initiatives. She earned

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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