WASHINGTON—Declining check volume is not a reason to turn attention away from monitoring for check fraud. Indeed, one expert is cautioning that check fraud has shown signs of increasing.
Alissa Fry-Harris, director of marketing at Bluepoint Solutions, Henderson, Nev., urged CUs to remain alert even as CUs shore up defenses for other channels, especially mobile.
“As we all know, check volumes are declining year over year, and there can come a point when the credit union might think they don’t need to worry about check fraud as much,” said Fry-Harris, who spoke to CUToday.info during CUNA’s Governmental Affairs Conference. “But the risk from check fraud loss is actually higher today because there are fewer checks.”
Bigger Checks
Fry-Harris said the reason for the increased risk is that while there are fewer checks, the fact businesses continue to write checks has contributed to another reason for increased risk.
“The fact remains that the per-check dollar loss is higher, according to a recent study by the Federal Reserve and American Bankers Association,” said Fry-Harris. “So even though it seems risk should be going down, that is not the case. It is still important closely watch out for check fraud to protect the member and the credit union’s reputation.”
Many experts have stated that rising usage of mobile deposit could lead to increased instances of duplicate check fraud, but Fry-Harris said recent analysis from Bluepoint does not provide evidence that is happening.
“Yes, mobile is taking off, but in studying the risk it remains to be seen if mobile is an attractive outlet for check fraud,” said Fry-Harris. “We have not seen real evidence to make a call one way or another.”
Alissa Fry-Harris, Bluepoint
But what is concerning regarding mobile, said Fry-Harris, is how credit unions are rushing to introduce their mobile solutions, such as remote deposit capture, to keep pace with competitors, She cautioned that many credit unions may be rolling out mobile applications without spending enough time addressing defenses for the new channel and assessing risk threats.
“It is clear credit unions are feeling pressure to roll out mobile and greater mobile functionality, but they need to be diligent in applying risk management to that process,” said Fry-Harris.
Duplicate Checks
When it comes to rolling out mobile deposit for checks, Fry-Harris said CUs should be setting up methods for detecting duplicate checks deposited through different channels, checking all deposit against a central database, and setting business rules and limits for deposits.
Fry-Harris said she is concerned how easy it is for credit unions to have their systems talk to each other to monitor for check fraud when they often use one vendor for a branch capture, one for ATM capture, and another for mobile.
“This can make it difficult and costly on the back end to mesh all these systems together and develop a system that can effectively monitor for check fraud,” she said.