Federal Reserve Financial Services (FRFS) now helps financial institutions combat check fraud by enabling them to see deposit information and images of potential duplicate items for commercial checks.

This ability is enabled by an expansion of the FedDetect Duplicate Notification for Check Services to include commercial checks as well as the Treasury checks it already included, FRFS said in a Nov. 13 press release.

With this expansion, the FedDetect service sends notices of potential duplicate Treasury or commercial checks across multiple payment channels and financial institutions, helping those institutions mitigate loss of funds due to fraud or deposit capture errors, according to the release.

FRFS offers this service at no additional cost, per the release.

"Commercial checks remain a critically important form of payment, but they're also vulnerable to fraud," Shonda Clay, executive vice president and chief of product and relationship management at FRFS, said in the release. "With the expansion of our FedDetect service, we are providing financial institutions of all sizes another powerful tool in their risk mitigation toolkit."

"The weak link in payments is the paper check, because when you stick it in the mail, it's susceptible to being stolen," Pickering said.

FRFS found that checks accounted for the largest year-over-year increase in financial institutions experiencing fraud and losses in 2023, with attempted fraud rising by 7% and losses increasing by 12%.

During that year, 52% of financial institutions experienced attempted fraud related to checks, while 27% experienced losses related to checks, according to the annual Federal Reserve Financial Services Financial Institution Risk Officer Survey.