Tue, 09 April 2024 | banking consumers small business
Despite the rapid rise of digital payment methods, checks remain a significant part of American financial transactions, with a recent survey by Abrigo unveiling the stubborn persistence of both check usage and related fraud. The survey, which sampled over a thousand U.S. adults across various demographics in March 2024, reveals a startling landscape of financial fraud, with check fraud being notably prominent among the challenges faced by consumers and small businesses.
Approximately 45% of respondents reported falling victim to financial fraud, with 17% of those experiencing check fraud specifically. This suggests that potentially more than 20 million Americans have been affected by check fraud, a figure surpassing the combined populations of America's five largest cities.
Check Writing: A Generational Surprise
Contrary to expectations that digital-native generations might eschew traditional banking methods, the survey found 61% of Americans still embrace check writing, with surprising participation from younger demographics:
The Real Cost of Check Fraud
Check fraud victims often experience repeated targeting, with 51% reporting multiple incidents. Small business owners, in particular, face a higher risk, with 57% having been targeted by financial fraud and 60% of those experiencing check fraud multiple times. Despite public perception that credit card theft ranks as the most common financial fraud, banks face a greater liability from check fraud, with Suspicious Activity Report (SAR) filings for check fraud soaring past 680,000 in 2022 alone. This trend is projected to lead to a staggering $24 billion in global check fraud this year.
Jay Blandford, CEO of Abrigo, emphasizes the necessity for banks and credit unions to employ advanced, AI-powered technologies to combat this growing issue effectively. Abrigo's Fraud Detection platform aims to address this need by providing innovative solutions for fraud detection and prevention.
Emerging Challenges and Solutions
The survey also highlights an increased targeting of the U.S. Mail and postal service carriers for check fraud, a trend that surged since the COVID-19 pandemic. Despite this, 35% of respondents were unaware of mail theft as a method for check fraud, and 47% admitted to using mailboxes or mail services for checks.
Signature Bank of Georgia's Executive Vice Chair, Freddie Deutsch, noted a rise in sophisticated fraud tactics, including check washing and wire transfer fraud, underscoring the escalating challenges financial institutions face.
Consumer Awareness and Bank Technologies
The survey revealed a gap in consumer practices and awareness regarding check fraud prevention, with 31% of Americans unsure if they follow best practices. While 54% were uncertain about their banks' use of advanced fraud detection technologies, a significant majority expressed a desire to be involved in the validation process to enhance their customer experience.
Small businesses showed greater awareness and proactive engagement with fraud prevention technologies and educational resources provided by financial institutions. This proactive stance is crucial for both understanding the risks of check fraud and implementing effective defenses against it.
As the landscape of financial transactions continues to evolve, the persistence of check writing and the associated risks of fraud present ongoing challenges for consumers, small businesses, and financial institutions alike. The findings from Abrigo's survey highlight the critical need for awareness, education, and advanced technological solutions to navigate the complexities of modern financial fraud.