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  • Adam Yarnold

Let's End Check Fraud

Have you or your business been targeted by check fraud?   As the New York Times reports in 'Check Fraud Is on the Rise' and 'Check Fraud Is Rising and the Thieves Are Winning,'check fraud is more than just numbers – it's a personal and professional battle against sophisticated thieves looking to take your money.  

Unfortunately, it’s on the rise: FinCEN reported a 23% increase in check fraud Suspicious Activity Reports in 2022 and American Banker suggests the average balance of check fraud is $1,700.  And those stats are before the rollout of generative AI tools like ChatGPT that give scammers the ability to mimic people in written conversations and now voice.  

The statistics and articles are a stark reminder that any of us, our families, or our businesses could be the next target for check fraudsters.But what if there was a solution? Enter Digital Drafts (DDs), a game-changer in combating these vulnerabilities. DDs can reduce check fraud while delivering lower costs and other benefits to users. 

First off, a review of check fraud practices identified in the NYT articles:

Forging Checks: Endorsing and cashing or depositing stolen checks.

Check Washing: Erasing details from checks and rewriting them for higher amounts.

Counterfeiting: Creating fake checks using sophisticated printers and materials.

Stealing Checkbooks: Illegally obtaining and misusing checkbooks.

Intercepting Checks: Altering checks intercepted in transit.

Account Takeover: Producing checks or payments with stolen account information.

Insider Assistance: Collaborating with financial institution insiders to commit fraud.

Check fraudsters are resourceful - we have to give them that.  Now, imagine what they can do with AI tools!  AI can impersonate images, chat, voice, etc.   Banks, businesses, and people deserve a more secure, efficient, and reliable way to send payments that can finally get ahead of these malicious actors who are trying to steal from all of us. 

Fin3’s new payment technology, Digital Drafts, can be this better payment methods.  

Digital Drafts (quick intro to Digital Drafts here, here, and here)

DDs are essentially a digital version of a check, enabled by the reforms to the Uniform Commercial Code.  DDs are delivered to the person receiving the payment (payee) via email or SMS.  If the person sending the payment (payor) wants to add in security / identity verification features that the payee has to go through prior to settlement, Fin3 offers steps such as verifying the payee’s identity, running the payee’s account information through known problem account databases, running through Fin3’s real time anti fraud checks, and up to video verification.  

Security and Privacy at the Forefront

Digital Drafts are designed with robust security measures.  Payors create digital drafts in a secure platform, which defeats typical fraudster methods of stealing checkbooks or taking over accounts.  The DD itself is digital and has unique properties, so malicious actors can’t duplicate or fake them.  

Convenience and Flexibility

DDs offer the same "one-sidedness" as checks – you only need the payee's name and contact information to initiate a payment. This simplicity, combined with the flexibility for payees to cash out at their convenience, makes DDs a superior choice for both businesses and individuals.

Cost-Effective and Fast

Printing and mailing checks is expensive (direct costs) as is spending your time or your employee’s time (indirect costs) to cash them.  Also, depositing a check takes days - no customer is ever happy waiting multiple days for a check to clear.  With DDs, the cost of transactions is considerably reduced - there is no printing or mailing needed.  Employee time is also greatly reduced because they’re digital.  They provide a faster alternative to traditional checks, enhancing the efficiency of financial operations.

Programmability and Transparency

DDs come with the added benefits of programmability and transparency, allowing for more control and visibility over transactions. This feature is particularly valuable for businesses managing complex financial operations.  DDs can transmit memo information in a way that checks don’t, and DDs have many programmable uses - for example, imagine a DD that doesn’t go live until the title of an asset is transferred. 

Let’s Fix Check Fraud

Check Fraud is a major risk, and it’s likely to get way worse with the rise of tools like generative AI that can mimic a person in written correspondence or now, in voice conversations.  Digital Drafts not only address the security gaps in traditional checks but also enable businesses, banks, and people to pay faster, cheaper, and more safely.  

If you're interested in exploring how Digital Drafts can safeguard your transactions and improve your financial workflow, reach out to us at Fin3. Let's embrace the future of secure and efficient payments together!

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