check fraud mitigation

Check Fraud: Common Examples and How to Stay Ahead of the Fraudsters

Check fraud can be defined as using paper or electronic checks to obtain money illegally and can occur at any step in the user journey or from any deposit channel. As the most prevalent type of fraud at financial institutions, check fraud costs billions of dollars in losses annually, while impacting millions of account holders each year. Advanced technology can help decrease the risk for fraud, but requires a holistic, multi-faceted approach that combines best practices and cutting-edge capabilities. 

Common examples of check fraud include: 

Account Takeover

Like identity theft, this type of fraud happens when an unauthorized individual gain access through online banking applications, capturing the account information to create and write bad checks. 

Altered Checks

Altered check fraud occurs when a fraudster changes the amounts and Payee from a stolen check. 
Check Kiting: This type of fraud involves two accounts from different financial institutions. Here the account owner writes a check from one account and deposits it into the other account so as to inflate the balance and then withdraw the funds.

Check Washing

With Check washing, checks are washed with chemicals to erase the information and populated with new information. 

Counterfeit Cashiers/Official Checks

Duplicating a negotiated check or an official check. 

Lottery Check Scams

Victims of lottery check scams receive checks for their winnings, but they are instructed they must return some of the funds for fees and taxes. 

Money Order Fraud

Money order fraud happens when a fraudster purchases a money order for a dollar then changes the amount in figure to a higher amount. 

Paycheck Scams

With paycheck scams, the fraudster reaches out to the victim and offers a work from home job, to be a secret shopper, use their vehicle for advertisement (Car Wrapping) or to test out a money transfer service. A check is then mailed to the victim with instructions. 

Mitigate Your Risk for Check Fraud with Alogent

With comprehensive, built-in check fraud mitigation capabilities, Unify, Alogent’s modern deposits platform for all full- and self-service channels, helps protect financial institutions and their account holders by mitigating attempts before they reach the back office or downstream workflows. 

Learn more in this document

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