Jackie Stewart is the Executive Editor of Bank Director. She is responsible for writing and editing features for the company’s weekly newsletter and quarterly print magazine and oversees sponsored research reports. Jackie is particularly interested in community banking and M&A activity. She previously served in a number of reporter and editor roles with American Banker, including executive editor of American Banker Magazine. She has also covered retirement issues for Kiplinger and spent two years teaching middle school literacy in the Bronx, New York, through Teach For America.
The Fraud Menace: Protecting Your Bank
Criminals are getting smarter and more innovative when it comes to defrauding banks and their customers. But there are ways institutions can fight back against this growing threat.
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Written by
Jackie Stewart
Executive Editor
Jackie Stewart
Executive Editor
During my first year leading my daughter’s Girl Scout troop, we hit a snag during the nonprofit’s famous cookie sale. A $30 check from a customer bounced. As a result, the troop’s bank account was hit with a fee. I remember the stress of thinking the girls could be out those funds, more than $50, which was a significant amount to the troop at the time.
To try and salvage the situation, I reached out to the customer to see if we could get another form of payment. Much to my relief, she was more than willing to help. The check bounced, she said, because she had fallen victim to a scam. A fraudster had spoofed her credit union’s phone number and manipulated her into giving up her account information. Once the credit union realized the issue, it closed her account, causing the check to be rejected. Our Girl Scout troop ended up getting its money for the cookies, and our bank waived the fee for the returned check. 
In many ways, my story is not unique. Almost everyone has experienced fraud — they have fallen victim to some sort of scheme, a loved one has had their credit card information stolen or a friend accidentally gave personal information to a criminal on the phone. My story is, perhaps, different in that our Girl Scout troop didn’t suffer any losses.
That isn’t often the case. Consumers lost billions of dollars last year to fraud. Meanwhile, banks frequently must help customers navigate the aftermath of being a victim and are often on the hook for repaying those funds.
This report, which is sponsored by CSI, a provider of banking and risk management solutions, takes a deep dive into this problem by exploring common types of fraud, including check fraud, and emerging threats posed by artificial intelligence. We examine how institutions are balancing a seamless customer experience with making it harder for criminals to steal account information and money. We also provide solutions that bank leaders can consider to combat fraud, such as joining a consortium or peer group to exchange data and see broader trends. Finally, the report offers insights into the role the board should have in fraud prevention, including a checklist directors can utilize to guide their oversight.
Fraud is, without a doubt, a significant challenge to the industry right now. Hopefully, this report will provide you with some knowledge and tools in your fight against it.