Over seven in ten (73%) US financial institutions believe preventing check fraud is one of the biggest fraud challenges they currently face, reveals new research from fraud and financial crime prevention company Featurespace, a Visa Solution.

This rises to eight in ten (80%) amongst the largest financial institutions with over 250 employees.

Three quarters (77%) of US financial institutions say preventing check fraud has become a bigger priority in the last 12 months (this again rises to 80% for institutions with over 250 employees).

Accordingly, many financial institutions face challenges in tackling rising check fraud – two thirds (67%) say it is one of the hardest types of fraud to identify and prevent whilst 66% have seen an increase in check fraud losses over the last 12 months.

Checks remain a highly popular form of payment in the US. The latest Federal Reserve figures show that over 11 billion checks are deposited in the US each year – a total transaction value of  $27.44 trillion.  

Consumers are also concerned about rising check fraud – over half (54%) say they have seen an increase in check fraud attempts in the last 12 months, rising to 72% for those people who have previously been victim to a scam.

This is an issue that is likely to spike over the next few months - seven in ten (68%) US consumers feel there is an increase in check fraud attempts around holiday periods, such as Thanksgiving.

Check fraud remains a major concern for bank customers, with over three quarters (77%) of US consumers saying that financial institutions need to do more to protect consumers from check fraud. Despite the fact that check volumes are reducing, fraud is increasing with greater sophistication and criminal organization so banks and other US financial institutions are already stepping up consumer protections, with eight in ten (80%) increasing investment to tackle check fraud.

As scammers evolve their tactics, banks are responding with new tools: over eight in ten (84%) financial institutions say that new technologies such as Artificial Intelligence (AI) are key to tackling rising check fraud – this rises to 88% amongst the largest institutions with over 250 employees.

Financial institutions are also leveraging the power of AI to tackle rising check fraud rates - eight in ten (82%) have already integrated AI into their security measures, those yet to do so risk losing a competitive edge by not adequately protecting customers.

Check fraud remains a significant contributor to rising global fraud losses – in the US, the latest Federal Trade Commission figures show that fraud losses hit $12.5 billion in 2024, over $2 billion more than the figure in 2023*.

Jason Blackhurst, SVP, Head of Featurespace and Acceptance Risk Solutions at Visa, says: “Check fraud may be old-school, but fraudsters are giving it a modern twist. With the holiday season approaching, banks must be proactive. AI is the frontline defence for many banks and financial in institutions. Those that delay, risk falling behind in protecting their customers.”

One major US credit union cut its check fraud losses by over 90% over two years by integrating an AI approach whilst reducing overall fraud alert volumes by 35% and seeing a 15% increase in fraud capture rates. 

Featurespace provides ground-breaking solutions using AI and machine learning to help banks and financial institutions crack down on fraud, including offering forensic image detection capabilities. Alongside its model optimised for real-time data analytics, Featurespace helps financial institutions build a deep understanding of each customer’s typical activity for accurate fraud detection, identifying both existing and new forms of fraud.  

Featurespace’s technology has successfully protected more than 500 million consumers globally in over 100 countries.