Check fraud is rising across the Southeast, creating challenges for financial institutions and their members. In Tennessee alone, the Federal Trade Commission (FTC) received approximately 86,000 fraud-related complaints in 2023, with reported financial losses totaling $133.6 million. Additionally, the FBI reported that Tennessee residents lost over $160 million to internet scams last year, highlighting the pervasive nature of fraud in the state.
As credit unions, it’s vital to understand these trends and take proactive measures to safeguard your members and assets.
Understanding the Issue
Check fraud involves altering, forging, or counterfeiting checks to steal money. While fraudsters have used these methods for decades, they now leverage advanced technology and social engineering tactics to exploit vulnerabilities in individuals and financial institutions.
Key tactics include:
- Counterfeit Checks: Fraudsters create fake checks that closely mimic legitimate ones.
- Check Washing: Using chemicals to erase and alter check details.
- Fake Deposits: Scams involving fraudulent checks through mobile deposit platforms or ATMs.
- Social Engineering: Scammers convince individuals to share account information or cash fraudulent checks, often under the guise of legitimate transactions.
Why the Southeast Is a Target
The Southeast region, including Tennessee, has seen a spike in these schemes, partly due to its diverse mix of urban and rural areas, which provides scammers with opportunities to exploit varying levels of financial literacy and technology access. The rise in digital banking has also introduced new avenues for fraud, as some members may not yet be fully aware of cybersecurity best practices.
Mark Your Calendar: Tennessee Credit Union League Fraud Conference
To help combat this growing issue, the Tennessee Credit Union League will host a Fraud Conference on Wednesday, March 19, in Nashville.
This event will focus on check fraud, anti-human trafficking and actionable steps your credit union can take to identify and combat fraud. The conference is an excellent opportunity to learn from experts and collaborate with peers to strengthen your fraud prevention strategies. Registration will open in early January.
