By James Watts | Senior Product Manager at Mitek
While check verification systems are helpful, check fraud remains a significant threat to financial institutions and their customers. Despite a decrease in the number of checks being used, the rate of fraud has still been on the rise within this particular area. The American Bankers Association reported that in 2020, attempted check fraud increased to $15.1 billion, accounting for 60% of attempted identity theft and banking fraud against deposit accounts. The leading check fraud categories were counterfeit checks, forged signatures, and return deposited items across all deposit channels, including over the counter, online fraud, and in-clearing.
Check fraud has spiked in the U.S. as thieves use tried and true tricks to steal checks. It could be as simple as stealing checks out of a mailbox and using editing software to alter the name, or writing counterfeit checks. What’s new is the sale of these checks on the dark web. With access to greater distribution, fraudsters have a wide market of buyers who are constantly trying to figure out ways to take advantage of the weakest link within the system.
In the case of a check transaction, a significant gap exists where many banks do not possess updated technology to combat modern attacks. In a recent blog, Mike Diamond, Mitek’s Senior Vice-President and GM of Digital Banking, notes that while fraudster tools and attacks have become more sophisticated, the defense of banks, credit unions, and other financial institutions generally depends upon technology implemented back in the mid 90’s.
In addition, financial institutions are generally reluctant to share information, especially about vulnerabilities, amongst each other because they are unsure about what they are allowed to, or should, share. There is a lack of data consortiums and established processes for the formal sharing of information. With fraud trends moving faster and faster, it’s more critical than ever for banks to stay informed of threats and tactics for fraud prevention in order to defend themselves in real-time.
One big reason for the lack of adoption of a modern check fraud detection tool is the complexity of available solutions. From our 35 years in digital image capture, mobile deposit, and identity solutions, there are two main factors that the most effective fraud protection technology will possess. Artificial intelligence that allows insights to be generated, tested, perfected, and applied as fast as possible paired with the availability of high performance, secure cloud-computing services is the strongest combination of defense that banks can take to significantly reduce check fraud.
Based on those criteria, Mitek’s Check Fraud Defender is a powerful solution that detects forgeries and suspicious activity that might otherwise be missed by traditional fraud detection software. The innovative and versatile technology has the ability to analyze checks deposited from all channels, including mobile deposit, in-branch, and ATMs. Some of the top 25 US financial institutions license Check Fraud Defender and have experienced up to a 90% savings in manual review time following its initial deployment.
The patented computer vision technology includes a proprietary visual inspection model that enables financial institutions to have a higher degree of confidence in check fraud detection and significantly reduce false positives. Mitek leverages artificial intelligence and machine learning to go beyond just account data, scoring 18 check attributes. Overall, fraud risk management is easier for banks because they are able to identify fraudulent activity at a greater rate, reduce fraud losses, centralize decision making, enhance the customer experience, minimize manual reviews, and decrease operational costs.
About the author: James Watts | Senior Product Manager, Deposit Solutions - joined Mitek in 2017 and is currently the Senior Product Manager, Mobile and Fraud on the Deposits Solutions team.James has had a distinguished track record in complex, technical environments, and leading customers through advanced digital technologies and change. Combining his technical ability with business acumen to evaluate new technologies and develop partnerships at all levels.