Today the Accredited Standards Committee X9 Inc. (X9), the organization accredited by ANSI to develop financial industry standards for the United States, announced the publication of an informative report, “Mitigating Check Fraud Risk in the Modern Financial Ecosystem.” X9 is also launching a broad, open industry forum that will cover all types of payment fraud, incorporating the existing check fraud forum under its umbrella.
The new report provides the financial industry with actionable strategies to mitigate fraud risk while balancing operational efficiency and customer trust. It includes an assessment of the current check payments landscape and examines the financial impact of check fraud on the industry. Key findings from this report will be incorporated into X9’s Technical Report 8: Check Security. The new document is now available for download without charge.
Specifically, the informative report:
— Outlines check fraud categories and scenarios
— Evaluates detection and prevention tools and strategies
— Offers procedural recommendations alongside high-level regulatory reminders
— Provides details related to educational plans for financial institution employees and customers
Background
Despite the rapid adoption of digital payment systems, nearly all businesses still use checks for some financial transactions. Consumers continue to use checks for various expenses, and government entities also issue many benefits via check. Checks thus remain a viable and increasingly targeted instrument for fraud. Criminals have now adapted traditional fraud techniques to exploit various points in the check payment ecosystem.
This recent increase in check fraud has resulted in substantial financial losses for institutions, businesses and consumers. As a further complication, the combination of physical instruments (checks) and digital processing systems has created a hybrid risk environment that requires modernized detection and prevention strategies. The X9 report describes mitigation techniques for this situation.
As one example, the report provides detailed recommendations for better check design, such as thoughtfully engineered physical safeguards that make counterfeiting and alteration significantly more difficult and more detectable. These recommendations outline proven best practices for creating high-security checks, which, when combined with the multilayered operational and technological controls also discussed in the report, form a more resilient barrier against persistent check fraud trends.
New Payment Fraud Forum
While the new report focuses on check fraud, many of the risks it identifies reflect a broader challenge facing the U.S. payments ecosystem. Fraud is increasingly crossing payment channels, institutions, technologies and customer touchpoints. Effective mitigation therefore requires not only stronger controls for individual payment types, but also greater coordination across the full range of payment systems.
Today, there are gaps in how fraudulent activity is described, categorized, reported and mitigated throughout the financial ecosystem. To address this, a new umbrella X9 Payment Fraud Forum is being created that will bring together stakeholders from various industries to identify and address these gaps across all kinds of payments, and to develop approaches to combat fraud across payment types and rails. The forum will build on the work of the existing X9 Check Fraud Forum, which will continue its focus on reducing check fraud as a sub-forum within the broader Payment Fraud Forum structure.
The new forum will allow stakeholders that are not X9 members to participate; there is no charge to join the initiative. Potential participants can indicate their interest on the X9 website.
“We want to thank the 100-plus members of the Check Fraud Industry Forum, who worked hard all last year and this year to research and develop the new check fraud report. Their insights and innovations, in addition to the effective coordination within the group, have been impressive and invaluable, and will benefit both check users and financial institutions,” said Jackie Pagán, X9B Financial Services Operations Subcommittee Chair. “We urge everyone who is interested to join with us in the new group and work to mitigate payment fraud of all types, protecting consumers, businesses and financial institutions against loss and disruption.”
About the Accredited Standards Committee X9 Inc.
The Accredited Standards Committee X9 Inc. is a non-profit organization accredited by the American National Standards Institute (ANSI) to develop and maintain national and through ISO international standards for the financial services industry. The subjects of X9’s standards include: retail, mobile and business payments; corporate treasury functions; blockchain technology; electronic exchange of check images; processing of electronic legal orders issued to financial institutions; tracking of financial transactions and instruments; financial transaction messaging (ISO 8583 and 20022); quantum computing; AI, QR code secure payments; checks; cloud; data breach notification and more. In addition, X9 is the governing body for a family of X9 Financial PKI products issued by DigiCert.
X9 acts as the U.S. Technical Advisory Group (TAG) for ISO TC68 (Financial Services) and performs the secretariat functions for ISO TC68. Please visit our website (www.x9.org) for more information.
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