Check deposits have been a constant focus for fraudsters, but during the pandemic we saw a significant decrease in check fraud as government stimulus programs were targeted. By the middle of 2021 however, check fraud was back with a vengeance and the water level has seemingly risen to historic heights. To mitigate risk and  losses, financial institutions should consider partnering with third-party companies, like Fiserv, to help manage and safeguard against rising fraud exposure.

A recent webinar from PaymentsJournal features industry leaders in check deposit solutions, who discuss how they can help financial institutions reduce fraud losses through new technology and insight. The webinar features Brian Riley, Director of Credit at Javelin Strategy and Research; Jeff Burton, VP of Deposit Solutions at Fiserv; and Rodney Drake, Chief Strategy Officer at Valid Systems.

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The three speakers provided important insights into check fraud, which are summarized below.

Financial Institution’s without Check Deposits Fraud Tools Are an Easy Mark for Fraudsters

With the increasing risk of check fraud and the migration of transactions to mobile channels, institutions must provide efficient and secure services to customers while managing risk.

“Clients are looking for less friction and faster availability of funds once they deposit a check,” Drake said. “Yet in providing that, the bank is obviously leaving itself exposed to more risk, particularly in mobile.”

Traditionally, there was a significant period between when a check was deposited and the funds were made available. Customer expectations continue to grow around instant payments and availability. But shortening that period can drastically increase risk, making it easier for crooks to commit check fraud.

After the onset of the COVID-19 pandemic, the government injected an unprecedented amount of stimulus money into the economy, much of which was distributed through checks.

“Those checks became easy targets for fraudsters, who took advantage of the lack of investment in fraud prevention in the check business,” Burton said. “Additionally, with more people working from home, more checks were sitting in the mail, which led to an increase in check fraud.”

Checks are obviously not top of mind for many banks as the emphasis shifts toward digital payments. However,