Check volume is in decline while fraud is increasing
The payment landscape is changing due to the steady decline in check volume, the increasing use of the Automated Clearing House (ACH), and the continued growth of card, online and mobile payments. After many decades of providing the most efficient form of payment, check payment volume is decreasing, but organizations find it difficult to give up an established and proven method of payment perceived as secure and convenient.
Despite all the changes, consumers and businesses continue to use checks for a substantial portion of their payments. Checks remain the most widely used payment method and will keep this position for many years to come.
Highly-sophisticated, but inexpensive technology is now available to criminals, allowing them to produce hundreds of authentic-looking counterfeits in a matter of hours.
As a result, mass usage of checks makes them one of the most frequent subjects of fraud. Check fraud results in the loss of billions of dollars a year for banks, financial institutions and retailers, regardless of their size or location. It takes various forms of illegal and/or deceptive practices that includes signature forgery, counterfeit checks, and physical alteration of the paper check such as check washing. Identity falsification that had previously been the specialty of professional forgers has become widespread. Advances in technology are partly to blame. Highly-sophisticated but inexpensive technology is now available to criminals, allowing them to access basic personal or corporate account information and produce hundreds of authentic-looking counterfeits or forged checks in a matter of hours.
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Manual verification is a thing of the past
Image exchange added complexity to the situation, because banks can no longer rely on the physical clues of paper checks such as color, smell and feel used in the past to identify fraud.
The image exchange paradigm shift and high level of perpetrator sophistication requires an increased level of analysis for institutions looking to protect themselves from check fraud losses. While criminals have access to more sophisticated technology with which to attack the weak defenses of companies, new technology is constantly evolving to arm financial institutions with multiple effective means to fight fraud. Today, there are a variety of efficient fraud prevention solutions that are cost-effective for both large banks and smaller organizations. Check images allow the automation of fraud detection processes that could not be done manually in the required volumes or accuracy levels.
