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Check fraud is increasing says white paper
MADISON, Wis. (11/7/11)--A BluePoint Solutions white paper examines the common types of check fraud and related costs to financial institutions--including credit unions--then outlines methods that are effective in fighting fraud.

Even though the volume of checks is declining, checks are the most common payment method criminals use to perpetrate payments fraud against financial institutions, according to the paper, "The Changing Landscape of Payments: Lower Check Losses by Combatting Check Fraud."

Eighty percent of U.S. financial institutions have reported losses caused by check fraud, said BluePoint Solutions. Check fraud is the fastest growing and costliest method of payments fraud. Thirty percent of financial professionals reported a higher incidence of attempted or actual check payments fraud in 2010 than 2009 and a higher rate of growth than credit- and debit card fraud, corporate card fraud, and automated clearinghouse fraud or wire transfer fraud.

Many U.S. financial institutions are fighting the problem of check fraud directly by using a collaborative ap­proach, said the paper. By sharing intelligence that includes up-to-date check and demand deposit account information, these institutions have mutually benefited from pooled information to work together to reduce check fraud. They treat check fraud as an industry problem that is best handled collectively, not competitively, said BluePoint Solutions.

The single, most-critical best practice in stopping check fraud and reducing losses is to effectively push loss avoidance to the point-of-presentment, the paper advised. The earlier the potential fraud is identified, the sooner a financial institution can counteract it. This can include a combination of actions such as notifying depositors at the teller line they are depositing a suspicious check, applying an extended Reg CC hold when receiving the deposit, and adding or modifying a check hold before it is paid or returned by the paying institution.

To view the abstract and download a free copy of the paper, use the link.
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