Check Fraud: A Growing Concern for Business Owners and What your Financial Institution Can Do

Remote banking has quickly become a favorite among business owners who require more flexibility to manage their organization’s finances and faster access to funds. As a way to streamline deposit processes and expedite cash flows, corporates and merchants of all sizes have embraced remote deposit capture (RDC) solutions from banks and credit unions, especially as their check volumes remain steady. The Financial Brand also noted that small businesses continue to write eight times as many checks as retail account holders, amounting to about a check every day. However, these conveniences do not come without risk, especially as check values continue to increase. 

Surprising to many, it is possible for checks to become compromised after they have been scanned or imaged through remote banking channels where a desktop scanner or smartphone are used, as the check is not surrendered in its original, paper form. These checks can be washed and altered, and then deposited with different amounts and/or payee names – at the same or different institution, and through both remote and in-branch channels. Simply destroying a check after it is deposited is not enough to stop an attack.

Banks and Credit Unions Must Offer Robust Fraud Mitigation Capabilities to Strengthen Business Banking Relationships

Industry reports reveal that more than 30% of small businesses have been victims of check fraud. For fraudsters, these organizations have historically been easy targets because of the limited resources traditionally available. 

The 2023 AFP Payments and Control survey showed that even though more than 60% of these businesses have faced check fraud, 75% of them plan to continue their acceptance and use of checks. This is where financial institutions must embrace advanced technology to build trust and confidence with their merchant and corporate account holders. 

By implementing robust fraud mitigation capabilities, including those with a holistic, multi-faceted approach that combines best practices and cutting-edge capabilities, institutions can identify suspicious activities faster and protect their account holders. Combined with modern deposit platforms that process at the transaction level rather than through batches, banks, credit unions, and their account holders benefit from deposits that are decisioned in real-time at the point of deposit, with risks identified before the items reach the back office. 

In addition, if businesses elect to manage their deposit operations entirely through remote banking channels, an additional layer of protection may be provided through built-in features of their digital banking platform, such as dual control and robust permission settings. This makes the overall banking experience more secure, ultimately increasing account holder loyalty and streamlining their user journey. 

Unify is the only deposits automation platform that addresses all banking channels for consumers and corporates, with seamless integrations into mobile and remote banking solutions. With native check fraud mitigation features, combined with industry leading third-party tools for added security, financial institutions benefit from the most advanced image analytics capabilities to detect altered checks, check washing, money order fraud, counterfeit cashiers/official checks, account takeover, paycheck scams, lottery check scams, check kiting, paperhanging, and more.

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