Check fraud losses in the United States exceeded $24 billion last year and are not projected to slow down. As financial institutions move from fraud strategies focused purely on detection, to ones that prioritize both detection and prevention, policies will need to include a broader and more time sensitive approach in order to maintain financial security, protect the institution’s reputation, and ultimately maintain customer trust.
If you’ve heard the adage “you’re only as strong as your weakest link”, you should know that it holds true to fraud detection strategies as well. Fraudsters will capitalize on any available weaknesses within an institution, and without a fortified, comprehensive approach to detecting and preventing incoming check fraud, your financial institution could be at risk.
In an effort to mitigate losses and prioritize customer experience, it’s critical to keep customer accounts safe by implementing real-time detection. If your institution is taking action after posting, you are missing the opportunity to not just protect your customers but also your institution. Even one missed posting to a customer account can cause a ripple effect of customer attribution, loss of wallet share, and reputational damage.
“Check Fraud Defender helps our team do our jobs better, with fewer false positives and easier check fraud detection.”
-Lead Fraud Systems Director, Top 10 US Bank
Best practices for real-time check fraud detection
The top 5 components to consider as you develop your holistic approach to real-time check fraud detection
1. Minimize losses with day zero decisioning
The longer fraudulent checks go undetected, the greater the opportunity for fraudsters to deplete funds from accounts, leaving both your institution and your customers vulnerable to substantial financial losses. Real-time fraud detection is critical to address these threats by ensuring sub-second response times that alert on suspicious checks and block transactions before funds are disbursed.
2. Move beyond “on-us” and leverage consortium data to stop “in-transit”
Detecting and preventing both “on-us” and “in-transit” check fraud is essential when securing financial institutions. FI’s can detect more fraud by leveraging the additional information provided through a robust consortium model. This shared intelligence offers insights from thousands of participating institutions, enabling a pivot from mere detection to proactive prevention. Without the power of a consortium model, institutions are unable to easily make decisions on “in-transit” deposit items, and with over 70% of deposit items coming from other institutions, that can create a huge attack surface for fraudsters.
3. Deliver real-time coverage across all channels
Real-time fraud detection across all deposit channels—mobile deposit, in-branch, and ATM—is critical for ensuring comprehensive protection against evolving threats. Fraudsters often exploit gaps in channel specific detection, making consistent, real-time monitoring essential to closing vulnerabilities. In-branch real-time detection is particularly valuable, as it empowers frontline staff by providing instant insights into potential fraudulent checks, removing the burden of making judgment calls on their own. By analyzing transactions as they occur, financial institutions can quickly identify and block suspicious activity, preventing fraud before it impacts customers or operations. This holistic approach not only strengthens security but also builds trust by delivering seamless and safe banking experiences across every customer touchpoint.
4. Utilize artificial intelligence (AI) and machine learning (ML)
The utilization of artificial intelligence (AI) and machine learning (ML) algorithms to detect check fraud is critical for financial institutions in safeguarding their operations and customers. These advanced technologies can analyze vast amounts of transactional data in realtime, identifying patterns and anomalies that may indicate fraudulent activity. By leveraging AI and ML, institutions can significantly enhance the accuracy and speed of fraud detection, reducing financial losses and minimizing reputational risks. Additionally, these tools continuously learn and adapt to emerging fraud techniques, ensuring a proactive and robust defense against evolving threats. This innovative approach not only protects assets but also builds trust with customers by ensuring their financial security.
5. Implement real-time business rules
Real-time implementation of business rules is critical in the fight against check fraud because fraud schemes often occur within moments, leaving little time for manual intervention. By enabling realtime business rules, financial institutions are able to immediately flag suspicious transactions, preventing fraud before it can cause significant damage. This capability ensures rapid responses to evolving threats, keeping institutions agile and ahead of fraudsters. Additionally, real-time business applied. I.E a consortium enhance the effectiveness of fraud detection systems. The consortium allows institutions to continuously monitor and adapt to changing patterns seen at other institutions to detect more fraud and to quickly make adjustments before they become victims of the fraudsters’ evolving threats.
Your customer experience depends on real-time check fraud detection
Modern banking customers expect an end-user experience that is both secure and frictionless. Real-time fraud detection can help keep your customers safe while simultaneously reducing holds on deposited funds, ensuring higher customer satisfaction and loyalty.
Fraudsters exploit gaps in traditional detection systems by targeting vulnerabilities across multiple deposit channels, leaving financial institutions exposed to significant losses and reputational damage. Addressing these threats requires a holistic approach to real-time fraud detection that delivers consistent monitoring and prevention at every customer touchpoint.
Check Fraud Defender draws on consortium data from across 8500 financial institutions, it analyzes both images and data to deliver accurate, actionable results, which in turn enables your institution to detect “in-transit” fraud faster. This powerful combination provides deep insights into fraudulent patterns, enabling institutions to detect and prevent threats proactively across all deposit channels.
Ready to learn more about Check Fraud Defender and how it can help you develop a holistic approach to real-time fraud detection?
Contact one of our fraud specialists today