Information about Check Fraud
Basic Check Fraud Statistics
Here are some facts and statistics about check fraud compiled from various sources:
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A survey of 5,200 corporate members of the AFP received 337 responses.
* 71% of organizations experienced attempted or actual payments fraud in 2010.
* Checks were the payment format most frequently targeted for fraud, with 93% of attacked organizations reporting that their checks were involved.
* Among the most widely used techniques to commit payments fraud were counterfeit checks using the organization’s MICR line data (68 percent), alteration of payee names on checks issued by the organization (56 percent), and alteration of dollar amount on checks issued (35 percent).
* Checks were the payment method subject to the greatest financial loss resulting from fraud in 2010 for surveyed organizations. Fourteen percent of organizations that were victims of at least one attempt of check fraud during 2010 suffered a financial loss resulting from the fraud.
* Checks are still the most widely used payment instrument for B2B payments.
2011 AFP Payments Fraud Survey
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80% of business-to-business transactions are made by check; that number is expected to decrease only minimally in the coming years.
Nancy Atkinson, Senior Analyst at Aite Group, LLC, Transaction Trends Magazine, 08/07
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Organizations in the United States lose about 7% of their revenue to fraud.
60% of all fraud incidents within a business involve employees.The average fraud scheme goes undetected for 18 months
Association of Certified Fraud Examiners
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The 2009 ABA study estimates there were 760,955 cases of check fraud in 2008 with actual losses estimated at $1.024 billion, compared to 561,306 cases and $969 million in 2005 (2006 ABA Study) and 616,469 cases and $677 million in 2002 (2003 ABA).
Counterfeit checks resulted in loss of $271 million for banks in 2006 a 160% increase from 3 years prior.One in four money center size banks spent more than $20 million each in check fraud-related operating expense (not including actual losses). The median expense was about $10 million for money center banks, between $500,000 and $1 million for regional banks, $50,000 $250,000 for mid-size banks and about $5,000 for community banks.
American Banker’s Association, 2009 & 2006
Combining the ABA check fraud statistics (shown above) with Federal Reserve Payments Study data on the number of checks written in the United States estimated at 37.6, 33.1, and 27.8 billion in 2004, 2007, and 2010 respectively, reveals that the per-item cost of fraud losses has gone from $.018 to $.029 to $.036 (unadjusted for inflation). Essentially, the unit cost of fraud for every check written has doubled in these six years to 3.6 cents per item, even as aggregate check volume has fallen by 26 percent.
Federal Reserve Payments Study data with paraphrased commentary from Rich Oliver,
executive vice president of the Atlanta Fed and director of the Retail Payments Risk Forum
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The US Secret Service estimates $5 billion a year in the United States alone is the toll of check fraud. In fact, the chief of the agency’s financial crimes division calls check fraud "the number one way criminals today are attacking our financial systems."
U.S. Secret Service, 2007
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The number of Suspicious Activity Reports (SARs) for criminal activity related to check fraud, check kiting, counterfeit checks, and counterfeit negotiable instruments received by the FBI increased an average of 118.9% each year from 2003-2005.
These fraudulent activities accounted for 46.3 percent of the 941,993 SARs filed by U.S. financial institutions (excluding Bank Secrecy Act violations), and equaled more than $10.7 billion in losses.
FBI Financial Institution Fraud and Failure Report for Fiscal Year ending Sept. 30 2005
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Actual bank losses due to check fraud are approximately $700 million per year.
Mid-size banks ($500 million to $50 billion in assets) experienced the greatest increase in check fraud, a whopping 46 percent over the prior period.
Cornerstone Advisors, Inc., May 28, 2004
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Does Crime Pay? The imprisonment rate for check fraud in only 2%.
Department of Justice 2004
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More than 500 million checks are forged annually in the U.S., with losses totaling more than $10 billion.
Ernst & Young
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Losses from check fraud are expected to grow by 2.5 percent annually in the coming years.
American Banker magazine
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More than 1.2 million fraudulent checks are written each day - more than 13 per second.
Office of Comptroller of the Currency
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Fraud losses involving U.S. consumers and Canadian entities totaled $55 million last year.
Federal Trade Commission via the Los Angeles Times, July 2008
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In the same period that losses on checks went up 43 percent as shown in the 2007 ABA Deposit Account Fraud Survey, check volume, according to the Fed, went down by over 4 percent (see Chart 8). And, with check usage expected to continue to decline in future years, the increasing incidence of check fraud in a decreasing volume is a worrying trend.
ABA Deposit Account Fraud Survey Report