Note: This article was updated on May 15, 2023.
On February 27, 2023, the Financial Crimes Enforcement Network (FinCEN) issued an alert to financial institutions on the nationwide surge in check fraud schemes targeting the U.S. mail (Off-site). The alert notes that “criminals have been increasingly targeting the U.S. Mail and United States Postal Service mail carriers since the COVID-19 pandemic to commit check fraud.” Stolen checks often are altered using nail polish remover or other common chemicals (Off-site) to be made payable to the fraudster, deposited remotely and the funds withdrawn.
These checks can be of high dollar value, and fraud against consumer accounts bypasses most positive pay services (Off-site). Even business customers using positive pay services may not be alerted when checks are falsely endorsed and/or dollar amounts are not changed. Although there is recourse for some types of check fraud, timely returns are the most efficient way to handle these occurrences. How can financial institutions identify fraudulent checks within a short time frame to request a return?
FedPayments Reporter for Check may offer part of the solution.
For business accounts, the Corporate Payor Report allows your corporate customers early access to review check details the morning of presentment (via scheduled, secure push emails) to help the depository financial institution (DFI) meet return time frames.
- Front/back images on the available PDF option help address fraudulent checks that pass Positive Pay based on the check number/dollar amount and payee, when only the endorsement is invalid.
- Although the Bank of First Deposit (BOFD) typically is liable for the forged endorsement, it can be time-consuming for financial institutions to deal directly with the BOFD and for corporate customers to address potential late fees from the intended payee.
- The service also may potentially offer earlier access to official check activity reports.
For consumer accounts, a DFI-level Check Advanced Notice Payor Report allows your internal staff to review the highest dollar checks for potential alterations and suspicious endorsements.
- Late evening/early morning reporting allows you time to follow up with customers to validate high-dollar activity.
- Reports are cumulative and sorted in descending dollar amount with a maximum item count.
Contact your relationship manager to learn more about how FedPayments Reporter for Check could help your financial institution protect itself from check fraud.