Independent Banker - January 2024 - 22

PORTFOLIO
◎FOCUS FRAUD
Check fraud: 3 ways
to stop it in its tracks
Among ransomware and cyberattacks, it's important not to forget
about old-fashioned fraud-namely, check fraud. As incidents of this
type of fraud increase, experts explain how to prevent and mitigate it.
By Colleen Morrison
2. Educate business customers
on the importance of positive
pay. While businesses may be reticent
to change processes to incorporate
positive pay, providing examples
of how this check fraud mitigation
service works can protect them may
make a diff erence.
early a year ago, the Financial
Crimes Enforcement Network
(FinCEN) issued an alert to all
fi nancial institutions highlighting
a nationwide surge in check fraud
schemes targeting the U.S. mail
system. Then, in May, the United
States Postal Service and United
States Postal Inspection Service
announced expanded actions to
enhance mail security.
However, by September, the Offi ce
of the Inspector General of the United
States Postal Service had found those
eff orts lacking.
Steps to mitigate risks
As 2024 begins, check fraud-
particularly in the U.S. mail-
continues to be a challenge, but
community banks can act to protect
their institutions and their customers.
Experts point to three steps to bolster
fraud mitigation eff orts:
1.Employ new types of fraud
mitigation software. Technology
now allows community banks to
monitor inbound checks more
precisely. Using solution options from
service providers may help community
banks better identify potential fraud.
" We use software that actually
compares images of cleared checks
with clearing checks, " says Robert
N
Voets, vice president, fi nancial
crimes in the fraud intelligence
unit at $2 million-asset Ion Bank in
Naugatuck, Conn. " If your check stock
is a little diff erent, we'll get an alert.
If someone writes something in the
memo line that's not on other checks,
we'll get an alert. Nothing's 100%, but
it gives us an idea of what to review. "
For instance, Garett Boatright,
assistant vice president and business
services offi cer at $3.8 billionasset
First State Community Bank
in Farmington, Mo., recounts the
story of a customer who fell victim
to check fraud and chose not to
institute positive pay. To address
the fraud, the customer closed their
account and reopened it with a fresh
account number. Six months later,
the customer was hit again and
was more prepared to consider a
process change.
" We got them set up on positive
pay, worked with them to build the fi le
and upload it into our system, so they
22 // ICBA Independent Banker // January 2024
Illustration by Alekseiveprev/Adobe

Independent Banker - January 2024

Table of Contents for the Digital Edition of Independent Banker - January 2024

Contents
Independent Banker - January 2024 - Cover1
Independent Banker - January 2024 - Cover2
Independent Banker - January 2024 - Contents
Independent Banker - January 2024 - 2
Independent Banker - January 2024 - 3
Independent Banker - January 2024 - 4
Independent Banker - January 2024 - 5
Independent Banker - January 2024 - 6
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