Losses due to fraud in the banking industry rose to $2.2 billion in 2016, up 16 percent from 2014, according to the latest American Bankers Association (ABA) Deposit Account Fraud Survey Report.
Debit card fraud accounted for 58 percent — or $1.3 billion — of losses for the industry, similar to 2014. However, the study found that check fraud is on the rise, accounting for 35 percent of fraud losses. Most of it occurred at larger banks. This is the first increase in check fraud since 2008.
Additionally, 7 percent of fraud losses were attributable to online banking and other electronic transactions.
Attempted fraud against bank deposit accounts reached $19.1 billion in 2016, up from $12.9 billion in 2014 – a 48 percent increase. Banks stopped about $16.9 billion in fraud attempts in 2016. By comparison, there was $10.95 billion in fraud attempts in 2014, with $1.9 billion in fraud losses. In other words, banks prevented $9 out of every $10 of attempted deposit account fraud in 2016. In the face of increasingly sophisticated fraud schemes, banks are investing in new technologies and enhancing overall customer protections to thwart them.
“Fraud prevention never stops,” James Chessen, executive vice president of ABA’s Center for Payments and Cybersecurity, said. “Banks are constantly monitoring for patterns and trends and quickly evolving their techniques to stay a step ahead of fraudsters.”
Counterfeit cards are the leading type of debit card fraud. In addition, card-not-present’s share increased to 30 percent of debit fraud loss from 15 percent two years ago.
Further, 65 percent of respondents experienced gas pump skimming attempts in 2016, while 54 percent experienced ATM skimming attempts. In the check fraud categories, the most common scams were counterfeit checks and return deposited items.
“Fraud moves like water trying to find cracks in the system,” Chessen said. “We have long anticipated that fraudsters would change their tactics once chip card technology was implemented in the U.S. The survey shows attacks have shifted more to other payment platforms like checks and online transactions.”
The survey was conducted between June and September 2017 for year-end 2016 data. It is based on responses from 138 banks of all sizes.
To prevent against bank fraud, ABA recommends said consumers should not provide their Social Security number or account information to anyone online or over the phone. They also said to watch out for missing mail. Fraudsters look for monthly bank or credit card statements containing financial information. Consider enrolling in online banking and shred any hard copy documents before throwing them away.