With check fraud on the rise, new AI-powered platform helps banks fight back
Financial crime prevention firm says it is using AI to combat check fraud
AI allowing payment companies to develop ‘sophisticated’ models to defend against fraud: Rohit Chauhan
Co-host of ‘The Big Money Show’ Jackie DeAngelis speaks with Mastercard EVP of Artificial Intelligence Rohit Chauhan to discuss the company’s efforts to defend against credit card fraud.
While it has become unusual to see someone write a check at the grocery store these days as credit and debit cards have become widely adopted, checks are still a commonly used form of payment, and check fraud has exploded in recent years.
The U.S. Treasury's investigative arm, the Financial Crimes Enforcement Network (FinCEN), reported last year that reports of check fraud in 2022 exceeded 680,000, nearly doubling the number of filings the prior year.
Check fraud has surged in the U.S. in recent years, according to the Treasury Department's investigative arm, FinCEN. (iStock / iStock)
"The battle against check fraud is a race against evolving criminal tactics," said Datos Insights strategic adviser Becki LaPorte. "Fraudsters use this to their advantage and wield sophisticated tools. It is imperative for community financial institutions to adopt innovative technology solutions that protect customer funds without impacting the customer experience."
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The methods scammers use to acquire a check can vary from stealing checks through normal day-to-day commerce, stealing check payments from the mail or even obtaining customer credentials through phishing scams that may allow them to review check images online and create a counterfeit copy of a consumer's check.
Check fraud is on the rise with criminals able to access checking account information even without a physical check. (iStock / iStock)
As banks and credit unions scramble to combat the crime, financial crime prevention firm Abrigo has rolled out an artifical intelligence-powered fraud detection platform for institutions that fights fire with fire as fraudsters have become more sophisticated in the digital age.
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Abrigo's AI platform uses step-up authentication capabilities to pinpoint a higher rate of altered items, forgeries and fraudulent checks. The company says it is able to tailor the new tool to institutions' needs, automate processes and streamline workflows to increase efficiency and prioritize higher-risk activities.
"Community financial institutions have been dealing with tight margins since mid-2022," Abrigo CEO Jay Blandford told FOX Business. "Fraud adds to this margin pressure and negatively impacts reputation and customer experience. Despite rising fraud losses, financial institutions have indicated in Abrigo polls that they have limited ability to dedicate staff and resources to prioritize check fraud defenses."
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Financial crime prevention firm Abrigo is using AI to combat check fraud. (Shutthiphong Chandaeng/iStock / iStock)
In a pilot program last year, the platform, Abrigo Fraud Detection, was able to correctly identify 93% of a regional bank's total fraudulent check value, amounting to more than $330,000 in potential fraud loss avoidance.
"This platform is a game changer for fraud detection," said Abrigo CTO Ravi Nemalikanti. "It leverages the power of AI and machine learning to deliver unparalleled results for our customers, who have so far shared overwhelmingly positive feedback on its performance and ease of use."
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Abrigo Fraud Detection's check fraud detection capabilities officially launched last week, and the company plans to expand its fraud detection across additional transaction types throughout this year, including wires and the Federal Reserve's FedNow.
FOX Business' Erica Lamberg contributed to this report.