US: check fraud – still an issue for most companies

According to the Payments Fraud and Control Survey released by the Association for Financial Professionals, 61 percent of organizations have experienced attempted or actual payments fraud in 2012, down from 66 percent in 2011.

The same source points out that check fraud, one of the oldest forms of payment fraud, is still the most prevalent one. During the period under review, 87 percent of the cash managers, analysts, and directors have mentioned that their companies have been targeted by those who commit check fraud. Data shows that 50 percent of organizations have reported between 1 and 5 such fraud cases, while 15 percent have reported between 6 and 10 events and 22 percent have mentioned at least 20 check-fraud cases.

Research finds that 63 percent of cases have involved counterfeit checks, in which a scammer got hold of a check from a corporate bank account and created a fake check using the account and routing numbers. In many instances, the fraudster then bought goods online from merchants that offer electronic debit or e-check payment options. But, the survey unveils that perpetrators also have simpler tactics, such as altering the payee name (49 percent) or USD amount (28 percent) of the check.

According to findings, 16 percent of those targeted by check fraud have actually suffered financial losses. Fraud detection and control procedures may be a reason for that. The AFP report states that while many fraud attempts are made, fewer possibly succeed. A common prevention tool, for example, is “positive pay,” in which the company’s bank pays only the checks the company’s finance department preauthorizes.

The study also reveals that fraud involving corporate and commercial purchasing cards was the second-most-cited kind of payments trickery companies have experienced in 2012. 29 percent of the treasury department respondents to the AFP survey have declared their company had been targeted in this area, up from 20 percent in 2011.