Catalyst News

Still Trending: Check Fraud

by Catalyst Corporate | Jul 25, 2022
 Advanced Fraud Solutions (AFS) VP of Strategic Partnerships Jordan Bothwell and Catalyst Corporate VP Karen Coble recently conducted a webinar to discuss the current fraud landscape and share effective check fraud prevention strategies.

Bothwell led with an overview of the latest check fraud tactics impacting financial institutions in 2022. She explained how the incidence of payments fraud has changed within the market.


To illustrate the current landscape, AFS conducted a comparative analysis highlighting the impact payments fraud has had on financial institutions since the 2020 COVID pandemic. Fraudsters find areas to exploit in times of uncertainty and have continued this trend, Bothwell added. Furthermore, AFS projects payments fraud will increase amidst a potential economic downturn, because financial burdens unleash vulnerability for fraudulent activity to tick upward.

The price of fraud loss

The increase of fraudulent activity comes at a cost. The cost of fraud per dollar lost has steadily increased over the years to $4. This means that for every dollar of losses, associated chargebacks, fees and merchandise replacement is $4. For financial institutions, add reputation and trust to the mix. With fraud on the rise, now is the time to step up and fight back to protect your front line from fraudsters.

Trending fraud types for financial institutions

It’s important that financial institutions stay informed of current fraud trends because fraudsters are constantly evolving their methods and schemes. Bothwell spoke on the three primary stages of the account holder journey that are targeted. Specifically, the identity verification stage is a top challenge. New account openings and account logins are also vulnerable instances for fraud to occur. Striking a balance between fraud detection efforts and minimizing customer friction will instill trust for members.

Payment method most impacted by fraud

While checks may not be the first payment method that comes to mind when you think of fraud, check fraud is the top targeted method. With the least amount of technology, compared to other payment methods, checks are an easy entry point for fraudsters. From 2020 to 2021, 66% of institutions were having high rates of check fraud. Checks continue to be the main payment used by most organizations; hence they are the most impacted.

Check fraud evolution

Over the years, check fraud behavior has evolved. The average number of mobile deposits jumped 41% year-over-year between 2020 and 2021. Many financial institutions have increased their mobile deposit amount limit, resulting in an increase in transaction deposits. Fraudsters are targeting additional deposit channels that are gaining popularity, such as image-enabled ATMs, ITMs and “floating teller” devices. The webinar attendees were asked which deposit channel they experienced the most fraud on during the first half of 2022. The response of mobile and remote deposit capture (RDC) won by an overwhelming majority.

Top 5 fraud trends of 2021

Bothwell lists the top 5 fraud trends collected in 2021 and those still prevalent today:

  1. Prizes/sweepstakes/free gifts
  2. Fake check scams
  3. Phishing/spoofing
  4. Friendship/sweetheart swindles
  5. Unemployment scams

These fraud trends are predominantly centered around technology, but Bothwell provided some non-technological ideas to aid in combating these trends. With knowledge comes power, she said, and it is important not to underestimate employee and consumer awareness. Fraudsters thrive off human error by targeting people versus systems. Humans are the easiest entry point for fraudsters to gain access. This explains the importance of consumer awareness and informing members because they are most at risk.

Credit unions’ plan of action

How does your credit union plan to prepare for and reduce fraudulent activity for the remainder of 2022? Catalyst Corporate offers credit unions a premium check fraud detection solution with its Advanced Fraud Solutions (AFS) TrueChecks® Service. TrueChecks is efficient, easy-to-use fraud detection software that can stop fraud losses before they hit your bottom line. AFS estimates that TrueChecks captures 60-70% of fraudulent deposits.

TrueChecks is available with Catalyst Corporate’s TranzCapture suite of deposit services, as well as ImageClear deposit services, where it performs real-time check verification across deposit channels. Real-time verification is also available via direct access to the Advanced Fraud Solutions portal through Catalyst Corporate if your credit union does not use Catalyst deposit processing.

Check out the Current Fraud Trends webinar on-demand to learn more about protection and partnership with Catalyst Corporate and AFS TrueChecks today.