Six things to consider when investigating check deposit fraud

February 6, 2017 by Verafin

Good ol’ checks. Even though their use continues to decline, they’re still a thorn in the side of fraud investigators.

The Federal Reserve Payments Study 2016 shows the number of check payments in 2015 fell to 17.3 billion, down 2.5 billion since 2012 and over 20 billion since 2000. This slide has been underway since the mid-1990s, when check use peaked.

It’s worth noting that although their use is moving downhill, we’re still talking about significant dollar value. Check payments in 2015 rang in at $26.8 Trillion, which was a significantly higher value than credit card payments ($3.16 Trillion) or debit card payments ($2.56 Trillion) combined.

A 2016 Association for Financial Professionals (AFP) Payments Survey shows that check fraud remains a significant problem for organizations. 71% of all responding organizations experienced attempted or actual check fraud in 2015. Wire transfers, second place in these criminal olympics, rang in at 48%.

Investigating a check deposit

The 2015 American Bankers Association Deposit Account Fraud Survey reported that check fraud accounted for 32% of industry fraud loss in 2014, second only behind debit card fraud (66%). Clearly, FIs are having a difficult time removing the thorn.

One component of Verafin’s process of continually enhancing its fraud analytics, we work very closely with financial institutions to understand their current processes. While focusing on how we can elevate our Deposit Fraud analytics, we’ve studied several common tasks that analysts and investigators complete when a check deposit occurs.

Here are six questions to consider when investigating a check deposit:

  1. Was the deposit made via a mobile device, at an ATM, or in-branch?
  2. When did the customer open the account?
  3. Is the account balance inflated by other check deposits?
  4. Was there an immediate withdrawal after the deposit?
  5. What is the customer’s history depositing checks?
  6. What is the customer’s wider relationship with the FI?

That’s a lot of steps and what we’re hearing in our conversations with investigators is it all adds up to a lot of legwork.

Fortunately, Verafin’s deposit fraud solution can help.

Highly targeted alerts

Verafin’s latest Deposit Fraud analytics alert investigators to fraudulently deposited checks while removing the legwork of gathering the information needed to move forward quickly.

When analyzing a customer’s activity, Verafin considers several factors, including:

  • How the check was deposited. A mobile or ATM deposit increase risk due to the anonymity they afford the depositor.
  • If there are sufficient funds in the account to cover the check value.
  • The length of the institution’s relationship with the customer. A new customer brings an elevated risk compared to an established relationship.
  • If the customer has multiple products with the institution. There is less risk if the customer has a range of products, such as a home mortgage, auto loan, credit card, and more.
  •  The customer’s deposit history. Is the check deposit abnormal based on the customer’s past behavior?
  •  The withdrawal pattern following the deposit. Was there an attempt to withdraw the funds on the same day as the unusual deposit?

These factors, analyzed in tandem with the value of the check deposit, help generate a highly targeted alert that investigators consider “required viewing.”

Additional Factors

In addition to highly targeted alerts, Verafin includes many features that further enhance an investigator’s ability to quickly and accurately discover and act on check fraud activity.

  • View and compare check images: Verafin’s ability to import Check 21 data gives an investigator the ability to view an image of any check and visually compare it to images of past checks deposited in the account. This is particularly valuable in uncovering counterfeit checks.
  • Additional stolen check and check kiting analytics.
  • A complete view of a customer’s activity and history across transaction channels.
  • Case functionality and automated SAR filing: Verafin’s case functionality gives an investigator an “all-in-one-place” location to fully document their investigation. Plus, if the fraudulent activity is over $5000, from the case they can easily generate a SAR, access all the information needed to create a comprehensive narrative, and e-file directly with FinCEN.

Verafin’s approach to check deposit fraud detection protects an institution from its front-line to back office. It also enhances the investigation process by providing a complete picture in a centralized location—allowing for quicker, more confident decision-making.

Best of all? The positive feedback we are hearing from investigators at financial institutions across the country.

This is powerful thorn removal technology.


Verafin is the industry leader in enterprise Financial Crime Management solutions, providing a cloud-based, secure software platform for Fraud Detection and Management, BSA/AML Compliance and Management, High-Risk Customer Management and Information Sharing. Over 3800 banks and credit unions use Verafin to effectively fight financial crime and comply with regulations. Leveraging its unique big data intelligence, visual storytelling and collaborative investigation capabilities, Verafin significantly reduces false positive alerts, delivers context-rich insights and streamlines the daunting BSA/AML compliance processes that financial institutions face today.