On their way to digitization, banks are facing a tremendous increase in check fraud. Where digital banking is replacing physical deposits with online transfers, the need for using paper money has significantly decreased. However, some customers and businesses still rely on checks as they perceive them as secure. On the contrary, criminals are making efforts to take advantage of these money transfer methods.
With over 66% of financial institutions falling prey to check fraud, the need for biometric recognition systems is rapidly increasing. Simple identity verification is no more enough as criminals are using advanced tools to pose as imposters. Therefore, banks need to build biometric security mechanisms to combat check fraud. This blog provides insights regarding this scam and ways AI-powered solutions counter them.
Evolution of Rapidly Emerging Check Fraud - A Detailed Introduction
Criminals deploy several techniques to commit check fraud. They either steal them from mailboxes or take advantage of loopholes within the banking systems. With the advent of online deposits, fraudsters are also making efforts to find vulnerabilities within the operations. This is why the long-in-use identity verification methods are no more sufficient to detect criminal activities.
Furthermore, to dodge digital onboarding processes, criminals create synthetic identities and fraudulent checks. By forging account holder’s signature, making changes within the depositors’ information, and copying other characteristics, fraudsters steer clear of inefficient biometric security checks. Further methods that help criminals con the banking systems involve the following;
- Stimulus Check Fraud
Fraudsters trick customers by urging them to pay a fake debt. By stealing identity information and confidential details regarding the individuals, criminals easily make them fall into their trap. Scammers target high-profile customers by either calling them or dropping an email. They then deposit the amount into their fake accounts.
Therefore, banks require more efficient biometric recognition solutions to identify these scammers and restrict them from depositing their illicit funds. For physical verification, institutions can use fingerprint and facial features analysis kits. In the case of online deposits, digital banking platforms should incorporate online biometric ID validation mechanisms.
- Social Media Scams
As traditional payment processing methods involve high vulnerabilities, it becomes easier for criminals to carry out check fraud. Furthermore, inefficient biometric screening mechanisms also serve as a free ticket for fraudsters. In today’s world, fraudsters use social media platforms to sell stolen or fake checks. While deploying advanced tools like photoshop, it becomes challenging for banks to identify forgeries in them.
Fraudsters then use the fake checks they buy from Telegram or Whatsapp, deposit them in their accounts, and reap huge sums of money from banks. In order to identify these scammers, banks require robust biometric recognition solutions. With technologically-driven techniques at their disposal, criminals easily circulate fake checks. This requires banks to integrate biometric identity verification solutions to differentiate between legit and fraudulent checks during deposits.
Biometric User Authentication – Preventive Measures for Banks
Check fraud is becoming quite popular ever since banks moved their operations online. It involves criminals altering legit information and depositing amounts in their fake bank accounts. Moreover, fraudsters scam customers to trap them either through social media, prank calls or by using upfront of a legit bank. With a high number of individuals shifting towards online banking, the chances of check fraud are also skyrocketing.
Therefore, to restrict criminal attempts, banks require AI-powered biometric security solutions. With services like real-time identification, facial recognition, fingerprint analysis, e-signature validation, and liveness detection, banks can place effective preventive measures in fraudsters’ way. The biometric user authentication systems further benefit banks in the following ways to counter check fraud.
Automates the Onboarding Process
Biometric recognition solutions use mathematical algorithms to validate customers as well as their checks. This makes them impossible to breach and identify criminals in minimal time. Furthermore, with real-time selfie-based identification and liveness detection, banks can ensure that the customer depositing the amount is a legit entity.
Robust Docuetmn Valdiaiton
Criminals use fake signatures to make the check look legit. However, with a robust biometric ID card and other document validation, banks can cross-verify the characteristics such as holograms, signatures, and other traits. Ultimately, these institutions can actively combat criminal activities and restrict deposits of fake checks.
Cross-Verification Within Global Financial Records
AI-powered biometric security solutions enable banks to access global financial records. This way they can identify global offenders by cross-matching their information across various databases. Furthermore, digital biometric screening mechanisms help operational costs and time taken in verifying customers and validating their checks.
Keeping in view the dramatic increase in check fraud, banks need more efficient measures to restrict criminal activities. As fraudsters use document forgery and synthetic identities to deposit illicit funds, it becomes somewhat challenging for institutions to combat them. However, AI-powered biometric recognition solutions provide robust identification checks to detect fraud and counter criminal intention in an efficient way.