When Summit Credit Union of Greensboro, N.C., noticed a rise in check fraud, management knew they had to reverse that trend.
The $235 million-asset institution realized the increase in fraud coincided with more members using its mobile deposit service. In December 2017, management implemented new check review protocols and deployed new fraud mitigation technology. Specifically, Summit combined two of its fraud mitigation systems, provided by Advanced Fraud Solutions and Alogent, to use an omni-channel, real-time check fraud monitor.
The effort resulted in Summit reducing its losses incurred from check fraud while improving teller decision making. Summit’s success in addressing this vexing problem has earned Summit a Credit Union Journal Best Practices Award in the category of fraud reduction.
Check fraud is something that every institution must contend with. This accounted for 35 percent of fraud losses in financial services, according to a 2017 survey from the American Bankers Association.
From 2014 to 2018, Summit saw a 43 percent annualized increase in the number of its mobile deposit users. But this success also meant more check fraud.
Summit had already been using ImagePoint Hub from Alogent and TrueChecks from Advanced Fraud Solutions as separate systems so converting to the integrated platform was a “no-brainer,” said Carol Nault, chief operating officer at Summit. She worked closely with the IT department to make the change happen.
When items are deposited via the mobile app, the images are sent to a central hub and compared against the Advanced Fraud Solutions database in real time, Nault said. If there is a match for potential fraud, the item is flagged for manual review. The member receives a message advising them that their deposit is under review.
Once the item is manually examined, Summit makes a decision on whether to accept it. The member receives an email notification of the status, Nault said.
“By integrating the systems, we prevented the possibility of check fraud migrating from the teller line to the mobile deposit channel,” Nault said. “If we would have operated these channels separately, we would have exposed the credit union as well as our members to the potential for increased check fraud via the mobile channel.”
Additionally, prior to the integration, tellers had to take the additional step of scanning checks separately into the TrueChecks system. Now, it is done automatically through a single scan, and Summit can refuse checks at the teller line so that there isn’t a chance of it being returned, Nault added.
Given that the majority of losses incurred on teller deposits from problematic checks with for amounts less than $200, Summit trained its tellers to run all checks, no matter the amount, through the newly implemented technology.
Since implementing the joint solution, Nault noted, they were able to “identify bad checks at the point of presentment, effectively limiting the volume of [nonsufficient funds] check returns.” For example, in May, Summit recorded only two returned checks from its mobile channel because of fraud.
To the members, the transition was seamless, though employees did have to provide some education on why a check might be held, Nault said.
“However, when a hold does have to be placed [on a check], we explain to them that this is an additional layer of protection for them,” she added.
