Frank Abagnale Jr. successfully performed cons worth millions of dollars by posing as a Pan American World Airways pilot, a Georgia doctor, and a Louisiana parish prosecutor. He did all that in the 60s and his primary crime was check fraud, as documented in the biographical movie, Catch Me If You Can. Imagine what Frank could do in today’s banking environments with all its complex cross-channels.

Today, fraudster’s schemes evolve faster than Frank Abagnales ever did. This consistent evolution of fraud schemes demands that financial institutions audit their fraud detection solutions and scenarios on a fairly regular basis.

Performing a solution audit would determine the level of effectiveness of your institution's fraud coverage. It would identify additional areas of coverage that could be achieved by fully exploiting the existing data, as well as adding new data sources to improve current detection. It would also help prioritize recommendations and ...

At year’s end, I like to take a step back and assess the main fraud trends I’ve seen and heard when speaking with our customers. Not only have we seen a lot of movement in the ACH area due to the FFIEC Supplement released this year, but there also have been some major events in the news this year that have driven action in fraud prevention measures overall. There are a few trends, in particular, that stand out to me more than others.

1. Internal Fraud is Here to Stay: The interest in Internal Fraud continues to be high, and without a proactive monitoring system in place, banks are at higher risk of being exposed to theft from their own employees. Some of the more common fraud strategies in Internal Fraud include ...

Depending on which news report you read, sales on “Black Friday” and “Cyber Monday” were considerably higher than last year. What does that mean for the bank fraud investigator? More transactions to wade through! Right about now, bank fraud departments around the United States are working overtime combing through billions of transactions. Unfortunately, when volume increases, so too does the volume of fraud attempts.

When transaction volumes spike, any weaknesses in a bank’s fraud detection landscape are often magnified. That’s what the fraudster wants. The more stress the bank’s fraud department is under, the more likely it will be that fraud transactions will slip through.

You can’t do that much to control the volume, but you can capture the lessons learned when you and your team are pushed to the breaking point. Consider the following questions ...

I recently attended part of the Orbograph user group meeting where I participated in a panel discussing the value in combining forces in the fight against fraud. The panel was moderated by Jodi Pratt, well known in fraud-fighting circles. Speaking with me on the panel was Carl Bortol of Data Support Systems. Both Carl and I represent companies that have partnerships with Orbograph. On the panel, we discussed two levels of working together, integration and collaboration.

Integration
This level focuses on integrating the fraud detection system into the rest of the bank’s systems in an operational sense. This includes core systems like DDA and CIS, and transaction processing systems like Exceptions...

With the new year here, I figured it was a good time to step back and take stock of our progress – as an industry – in the ongoing battle against fraud. A frank assessment: we could be doing a lot better.

Sure, there are always improvements that can be made to the organizations, processes and technologies that must come together to solve a complex issue like fraud management. But I think the more important barriers our industry faces are more fundamental and structural in nature. Specifically, I see the following:

The Boiling Frog
Our industry’s slow reaction to the growing, morphing fraud problem makes me think of the boiling frog phenomenon. If you haven’t heard of it ...

In most college towns, this is the time of year when swarms of U-Hauls and overstuffed cars bear down onto college campuses. Students will settle into their dorms and likely kick off their social lives before their classes even begin. The funds that they have for day-to-day expenses will begin to run low, and students will look for ways to supplement their income. This is prime opportunity for fraudsters to seek out and prey upon students.

Given that, we can deduce why college campuses are a ‘hang out’ for fraudsters - because students are easy targets. The sheer volume of students makes it easy to recruit vulnerable, needy, and/or naive students. I find it interesting that the scams have not changed much since I was in college. Scams relating to fraudulent grant letters, credit cards applications, work from home, check cashing and the ever so popular ATM card scams are still thriving. It is still common for fraudsters to not only pay students to pass bad checks through their accounts for nominal compensation, but also to ...

In a recent Bank Fraud Forum blog post, Discussing Multi-Factor Authentication, Shirley Inscoe stated that cross-channel fraud detection enables the analysts "...to see the complete picture with regards to a customer or account, and detect suspicious events that would otherwise result in losses...” Having been an investigator as well as a manager of a cross-functional fraud team for over 2 decades, I could not agree more.

However, it must be said that even if you provide a holistic picture of fraud to the analysts, it does not do them - or your customers - any good if they are not skilled in investigating and properly mitigating cross-channel fraud alerts. For those who have worked fraud over multiple channels, there are varying rules and regulations that may entail some compliance issues, including Reg E, Reg CC, UCC Articles 3 and 4, Reg J, Check 21, Clearinghouse Rules ...

I have been in countless dialogues regarding fraud prevention with fraud and risk specialists at various management levels within financial institutions of all sizes. In my many discussions around various fraud prevention measures, I’ve come to realize that while a sophisticated enterprise fraud management system is the bank’s best line of defense, the front line employees can play a valuable role in detecting and preventing fraud.

Bank tellers are the front line of the institution, handling deposits, withdrawals, and transfers while trying to accurately account for every piece of paper and coin that passes through their hands every day. They also are human and, while they have been trained to spot alterations, counterfeits, and other fraudulent items, they also have instincts. Many times, a teller might not have physical proof of fraud but often has a ‘gut feeling’ that something just isn’t right. 

The ABA Risk Management Forum was held last week in Denver, Colorado, and I was glad to be in attendance and have the opportunity to present on the topic of deposit account fraud. The forum offered numerous educational sessions for financial institution employees as well as several great networking events.

Session topics covered during the forum included: implementing Dodd Frank; new risks in ATM security; cloud computing; and several other hot topics. To me, this event is one of the best annual industry events for community banks, and I am sure the larger banks in attendance were satisfied with the content as well.

I recently read an interesting article on AmericanBanker.com entitled, Defending Your Brand 2.0: Rapping w/readers, 140 characters at a time, by Sara Lepro. In her article, Sara demonstrates the need for financial institutions to insert themselves into social media conversations in order to have more control over the ‘chatter’ and ultimately to protect and defend their brand.

Historically, banks have been concerned about negative customer experiences and the impact of customer churn, especially when it comes to customers becoming victims of fraud. With the evolution of Facebook, Twitter and other social media forums, negative feedback is not only accelerated but many times exaggerated, thereby making it more of a challenge for banks to protect their brand.