Payments by paper checks have declined by more than 50% over the last decade. However, check fraud has not dropped proportionally. As highly secure EMV payment card transactions become ubiquitous in the U.S., some criminals have returned to counterfeit check fraud. Others have taken to scams with checks that take advantage of unwitting consumers.
In lottery scams, criminals advise consumers they have won a lottery and send a fraudulent “winnings” check. However, first consumers must pay the income taxes. In work-from-home scams, consumers receive a fraudulent payroll check from the criminal to whom they must send the “payroll taxes.”
Criminals have their victims send their “taxes” via Western Union or MoneyGram. Or they open a bank account, often using synthetic identity credentials, and have the funds sent there. Sometimes an unwitting consumer is used as a “mule” to open a new account using valid identification to deposit the “taxes,” which are then immediately transferred to another account.
Advanced Fraud Solutions (AFS) sends alerts about closed accounts, known scam accounts, and counterfeit check accounts to more than 1,500 financial institutions in all 50 states. Its TrueChecks database is gathered from more than 600 financial institutions, supplemented with data from other sources, including Early Warning.
Almost 50% of the 100 largest credit unions in the U.S. use TrueChecks, which verified 47 million checks last year. Jack Henry, Alogent, Fiserv, and other firms that create images of paper checks use API integration to AFS to verify items they process. Their customers receive a response in less than a second advising whether to accept or to deny a check.
Advanced Fraud Solutions’ TrueCards product fights payment card fraud. TrueCards includes a proprietary user interface and back-end processing capability to provide issuers with a view of all of their credit and debit card transactions in one place. Once fraud has been spotted on a card, TrueCards searches all cards in a portfolio to see where others might have been used at the same merchant. Issuers can decide to monitor or close down those cards.
TrueCards also performs merchant frequency searches to identify locations used by criminals to test stolen cards to see if they are still open for use and how much of a credit line might be exploited. If a merchant is typically visited by an issuer’s cardholders 10 times a month, and that figure suddenly jumps to 50, it suggests a test site for criminals.
AFS recently added technology from Q6 Cyber that identifies payment cards for sale on the dark web. That information is constantly fed into TrueCards so issuers can be advised to shut down a card, often before fraud has been committed.
—via The Nilson Report