Top 5 Challenges Investigators Face While Investigating Check Fraud

The year 2022 saw a 23% jump in check frauds compared to the previous year; and if reports by the Financial Crimes Enforcement Network (FinCEN) are to be believed, the trend shows no signs of slowing down.

The advancement of technology has further boosted this crime, making it more accessible for fraudsters to create fake IDs and recruit “walkers” to enter the bank and commit fraud.

If you and your team go through hundreds of checks manually every day, you’re setting yourself up for a high risk of overlooking fraud checks. And this is just the tip of the iceberg. 

Here are other major challenges that investigators face while uncovering check fraud: 

5 Major Challenges in Investigating Check Fraud

From government and high-tech banks like JPMorgan, to businesses that deal with high volumes of transactions every day— all are under the impact of check fraud. 

For institutions that see a large inflow of checks and other such paper-based documents, it becomes practically impossible to detect every fraud. The constantly changing nature of fraud due to the impact of technology further adds to the problem.

Here’s all that these institutions are dealing with:

1. Sophistication of Fraudulent Methods

With the advent of high-quality printers and advanced graphic editing software, fraudulent checks can be made to look incredibly authentic, making it difficult to distinguish them from legitimate ones. 

Criminals may use complex methods to create, alter, or forge checks that are very convincing, which can make the verification process time-consuming and technically challenging.

Fraudsters are using social media and editing applications to their maximum benefit. “It’s a big problem that’s getting worse,” said Paul Benda, senior vice president of cybersecurity and risk at the American Bankers Association, while talking to CNBC

The solution is this one-liner— only diamonds cut diamonds. The best way to tackle sophisticated fraud is to use highly accurate and fast software tools like ScanWriter, that offer 100% accuracy and high speed at an effective cost. 

2. Hard to Track Down Perpetrators 

Individuals committing check fraud often go to great lengths to conceal their identities and locations. They may operate across different jurisdictions or internationally, use fake IDs, or employ mail forwarding services to cover their tracks. 

This cross-jurisdictional nature of the crime can make coordination between different law enforcement agencies critical yet challenging.

A recent CNBC report uncovers the use of platforms like Telegram to organize these crime groups. These platforms allow their users to send encrypted messages and form groups whose messages cannot be traced easily. With anonymous identities, criminals recruit and train groups to commit such crimes. 

Encryption and anonymity are the two significant challenges in tracking the digital footprint of fraud groups.

3. High Volume of Transactions

The sheer number of checks processed daily can make it difficult to spot fraudulent activity. Take a look at the quarterly volume of commercial checks collected through the Federal Reserve:

Source – Federal Reserve

With this high number of check transactions, banks and businesses might not detect the fraud until the fake checks have already been cashed or until the legitimate account holder notices and reports unauthorized transactions. And at that point, the trail may already have gone cold.

Verifying each check among the sea of paper documents every day is a major challenge. Along with human error, manual checking distracts employees from their major goals, pulling their productivity down. Check scanning software like scanWriter is a great option to speed up verification and eliminate human error.

4. Lack of Reporting

In some instances, especially when the amounts are relatively small, victims or financial institutions may not report the fraud to authorities due to the perceived hassle or cost involved in investigation relative to the loss. 

This can lead to underreporting of check fraud and may allow perpetrators to continue their fraudulent activities unnoticed.

Businesses and organizations can encourage their customers to report by creating an easy and accessible reporting system for them. They can use social media channels like X (previously Twitter), Instagram and Facebook to educate their users. Also, software tools like ScanWriter can help keep track of suspicious activities in check data.

5. Complex Digital Records and Data Privacy Laws

Investigators may require access to the suspect’s or victim’s digital records, including emails or IP logs that could provide leads. However, obtaining this information requires navigating through privacy laws and regulations, which can delay investigations. 

Additionally, warrants or subpoenas may be needed to access such information, and these can take time to be approved and executed.

ScanWriter helps you keep an accessible record of scanned check data, facilitates batch processing of checks, creates data normalization rules, allows one-click source verification, and data visualization to detect any anomalies.

ScanWriter – Investigators’ Top Choice for Check Fraud Investigation

An ideal check fraud investigation tool shouldn’t just limit its functionality to investigating checks. It should offer the tools to analyze all kinds of check data and spot inconsistencies quickly.

Designed to save up to 90% of labor hours with its advanced check reading and data collection capabilities, ScanWriter is the one fraud detection instrument that checks all the right boxes.

Here are some more compelling reasons to consider the tool:

  • Trusted by Government Agencies: Trusted by federal, state, and local governments for secure check data recording and tracking.
  • Reads Handwritten and Printed Checks: Accurately reads both cursive and printed checks, reducing errors with error detection tools. It can even comprehend illegible handwriting with its advanced zooming in features.  
  • 100% Accuracy: ScanWriter can capture data from all kinds of documents, forms, PDFs, images, bank records, credit cards and brokerage documents. It can process the front and back of the check and guarantees a 100% accuracy in reading checks.This saves up all the time that would otherwise be spent in manually scanning documents.
  • Efficient Processing: ScanWriter can efficiently handle cases with as many as 100,000 check images. It reads 1-24 check images per page, and can process up to 1000 checks in less than an hour. Once the check is read, ScanWriter automatically sorts and organizes the data collected from it. The tool has a dual-screen data preview feature that displays the check image on one side and the data on the other. This side-by-side preview makes it easy to spot any inaccuracies quickly.
  • Consolidated Data Handling: ScanWriter organizes all the data collected from checks in an Excel sheet, together with the images of the checks. Users can also create rules to display the collected data in formats of their choice.
  • Automated Visualizations: ScanWriter makes it easy to detect suspicious activity by creating automated visualizations highlighting potential fraud. It uses Benford’s Law to create these visualizations, thereby protecting customers from financial loss with its advanced data analysis capabilities. 
  • Automatic Audit Trail: Features an automatic audit trail function for transparent activity tracking and comprehensive logs.

With the advancement of technology and algorithms, financial institutions and businesses now have more powerful tools like ScanWriter at their disposal to combat check fraud.

ScanWriter also offers a 14-day free pilot program for investigators working in the public sector. This way, business owners can test the software to see if it fits their needs before making any commitments. 

If this interests you, it would be a good idea to book a free demo today to start your journey.


Try ScanWriter Today