FedDetect Duplicate Notification Service Expanded to Include Commercial Checks

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.”

Checks continue to be a preferred payment method for many organizations, PYMNTS reported in April.

PYMNTS Intelligence has found that checks constitute a significant portion of B2B transactions across various industries, with the real estate sector using checks in nearly 21% of B2B transactions, retailers relying on checks for 15.2% of B2B payments, and 76% of subcontractors in the construction industry receiving payments primarily via checks.

Eighty percent of firms still process and mail paper checks to other firms, Rusty Pickering, president and chief operating officer of Ingo Payments, told PYMNTS CEO Karen Webster in an interview posted in November.

“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.