Check Fraud

Prevention through Technology and Communication is the Key to Loss Reduction

by Charles J. Bock Jr.
Excerpted with permission from the August 2012 issue of the Compass, a periodic publication of Chartwell Compliance

Check fraud historically has been one of banking’s most serious and continuing criminal concerns. The2009 American Bankers Association Check Fraud Study indicated there were 761,000 cases of check fraud in 2008 with losses of $1.24 billion. This is compared to 561,000 cases and $970 million in losses in 2006.

The United States Secret Service estimates $5 billion a year in US check fraud. The Chief of the Financial Crimes Division calls check fraud “the number one way criminals today are attacking our financial systems.” They also indicate that the imprisonment rate for check fraud is only 2 per cent. According to the 2010 Federal Reserve Payment Study there were approximately 24.5 billion checks paid in 2009 with a value of $36.1 trillion. Unless the debit card or other electronic payments completely replaces the check, check fraud will never be eliminated. It is just too profitable, especially for organized criminals. Banks can substantially reduce check crime by developing and following proactive strategies to avert loss. (Click here to access the complete August 2012 issue of Compass, including this article in its entirety.)

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