Fraudsters often leverage paper checks to help perpetrate scams — defined as the use of deception or manipulation intended to achieve financial gain. Longstanding trust in the legitimacy of paper checks and lengthy processing times can make them a lucrative target for these bad actors.
Introduced by the Federal Reserve in 2024, the ScamClassifier model (Off-site) can assist in identifying the root cause of the fraud that occurred due to a scam, either as a products or services scam, or as a relationship and trust scam. Use of the ScamClassifier model to support more consistent and detailed classification of scams can help prevent losses. In addition, having clear insights into the most relevant trends ultimately can lead to more targeted education and prevention strategies.
Explore a new article (Off-site), the first in a series, that focuses on ways to improve fraud mitigation and education by classifying check fraud and scams. It includes an example scenario where a freelance wedding planner is manipulated by a criminal when she deposits a fraudulent check into her account. Read the full article (Off-site) to learn how the ScamClassifier model can be used to provide a holistic picture of scams involving check fraud and corresponding trends.
Expand Your Toolkit
Duplicate check deposit is another common method fraudsters use to perpetrate scams. FedDetect® Duplicate Notification for Check Services helps financial institutions fight this method of check fraud by providing early notice of potential duplicate U.S. government and non-U.S. government checks, including both personal and business checks. Notices are sent via encrypted email and may be used to supplement a financial institution’s research and help it take appropriate action.
The FedDetect Duplicate Notification for Check Services is available to Check participants at no additional cost and does not interrupt normal check processing. Contact the Support Center or reach out to your relationship manager to learn more.
Visit FedPaymentsImprovement.org (Off-site) for more information and to register for full access to the ScamClassifier model, including its supporting terms and definitions.
Note: The ScamClassifier model is not intended to result in mandates or regulations, and does not give any legal status, rights or responsibilities, nor is it intended to define or imply liabilities for loss or create legal definitions, regulatory or reporting requirements. While sharing and use of the ScamClassifier model throughout the industry is encouraged, any adoption of the ScamClassifier model is voluntary at the discretion of each individual entity. Absent written consent, the ScamClassifier model may not be used in a manner that suggests the Federal Reserve endorses a third-party product or service.
