Each year, the Association for Financial Professionals (AFP) releases its AFP® Payments Fraud and Control Survey Report Key Highlights (Off-site, PDF), which examines the nature and extent of fraud attacks on business-to-business (B2B) transactions and the payment methods impacted. The report is based on a survey of corporate practitioners from organizations of varying sizes representing a broad range of industries. The 2024 survey identified checks as the payment method most susceptible to fraud, partially because checks are still the most popular payment method among the organizations surveyed — 75% reported using checks and 70% said they had no immediate plans to stop using them.
Despite declining check volumes, the number of Suspicious Activity Reports (SARs) (Off-site) has soared in the last three years. The Financial Crimes Enforcement Network reported an increase of 40% for checks and 57% for mail, which is important to note because organizations in the banking industry are easy targets for check fraud via mail.
Federal Reserve Financial Services (FRFS) offers tools to help combat losses from check fraud. Early notification of potentially fraudulent activity helps risk officers identify bad actors and take appropriate action to limit future losses.
The FedPayments® Reporter Service for Check Services offers your institution additional tools to help fraud detection for both business customers and consumer accounts. For business accounts, the Corporate Payor Report allows corporate customers early access to review check details on the morning of presentment (via scheduled, secure push emails) to help meet return time frames. For consumer accounts, a financial institution-level Check Advanced Notice Payor Report provides internal staff more time to review the highest dollar checks for potential alterations and suspicious endorsements.
For banks of first deposit (BOFDs), the FedDetect® Duplicate Treasury Check Notifier Service offers daily reports on potential duplicate Treasury checks processed by the Federal Reserve Banks. This service reviews all Treasury checks that were deposited across multiple payment channels, including ATMs, mobile devices and tellers, by your institution or any other BOFD on the current day or previous 60 calendar days.
Contact your relationship manager to learn more about how FRFS Check Services could help your financial institution protect itself from check fraud.
“AFP” is a registered trademark of the Association for Financial Professionals.
