The art of combating check fraud without compromising customer experience
Checks may be written less frequently, but their value is rising. According to the Federal Reserve’s 2022 Payments Study, checks dropped from 14 billion in 2018 to 11.2 billion in 2021, while the average value per check jumped 27%. This growth has also drawn increasingly sophisticated fraud attempts, with the U.S. Treasury Department reporting that check fraud has increased 385% since the pandemic.
Staying ahead of fraudsters who quickly outsmart defense systems is critical for protecting customers. At the same time, regulators are ramping up pressure on financial institutions to strengthen fraud controls, imposing increasingly strict compliance requirements. Check fraud, in particular, is gaining attention: in June 2025, the Federal Reserve, the OCC, and the FDIC issued a joint request for information seeking public input on potential actions to help consumers, businesses and financial institutions mitigate the risk of payments fraud, with a particular focus on check fraud.
Yet financial institutions must protect against fraud without disrupting customer experience. Imagine a check flagged simply because a customer’s signature looks slightly different, but they were just in a hurry. These types of false alarms will frustrate customers. While they expect strong security, they also demand speed and convenience in their banking experiences, whether online, via mobile apps, or at the branch. If those expectations aren’t met, they won’t hesitate to take their business elsewhere.
So, fraud protection presents a delicate balance: too strict, and false positives tie up bankers and frustrate customers; too loose, and fraud runs rampant, resulting in financial loss, regulatory scrutiny and diminished customer trust. Financial institutions must find the sweet spot, catching sophisticated fraud quickly while keeping legitimate transactions seamless.
The sweet spot can be reached with modern, configurable AI technology capable of processing millions of documents daily – up to 25 million checks per day - at high speed and without compromising accuracy. Tools such as signature verification, document authentication and anomaly detection leverage machine learning (ML) to detect threats in real time and assign confidence scores to each result. These scores let financial institutions adjust thresholds for automatic approval, manual review, or escalation based on risk and transaction type, ensuring strong security. Behavioral pattern recognition like tracking signing speed or stroke order further protects the customer experience.
Effective fraud prevention also requires a unified, cross-channel approach. AI-driven detection should span mobile and online banking, branch tellers, remote deposit capture, ATMs and back-office operations.
Selecting the right vendor can be challenging, as it’s about more than just the technology, it’s also about trust and partnership. Financial institutions benefit most from solutions that adapt to their specific workflows, risk tolerance and evolving threats. Systems that appear effective at first may struggle to keep pace with changing fraud patterns or operational demands. Partnering with a vendor that can tailor and continuously refine the software helps ensure protections remain accurate, efficient and aligned with both the institution’s goals and customer experience.
Finding the right balance is key: financial institutions must protect against sophisticated check fraud, satisfy regulatory requirements and keep the customer experience seamless. With the right combination of AI-driven tools, cross-channel detection and adaptable vendor support, financial institutions can achieve effective protection without compromising financials, convenience and trust.
About Author:
Emiliano Giacchetti is the CEO of ParaScript, an AI-powered document processing company that processes large volumes of documents at high speed and accuracy. Emiliano has over 20 years of experience leading strategic and operational turnarounds across industries, including senior roles at McKinsey & Company, GLG (Gerson Lehrman Group), and Civitas Learning, and founding and co-founding several companies, including a strategy consulting firm and a growth equity fund. He holds dual M.S. degrees in Mechanical Engineering from the University of Rome Tor Vergata and the University of Illinois Chicago.