In recent years consumers have been using their debit cards more often while relying less on paper checks, meanwhile fraud rates on these billing instruments rise and fall with consumer use, but at different rates.
Reports of check fraud, to include check kiting and counterfeiting, in the United States declined 7.5 percent from 2010 to 2011. This is based off the number of Suspicious Activity Reports (SARs) filed with the Financial Crime Enforcement Network (FinCEN) over these past two years. SARs for check crimes peaked in 2008 but have since been on the decline, although in 2011 FinCEN received more total SARs than ever before. The reduction in reports of check fraud shouldn’t be too surprising as consumers have reduced their use of paper checks rapidly over the past several years. The American Bankers Association (ABA) reports that use of personal checks amongst U.S. consumers declined 12 percent from 2008 to 2010 while check fraud losses declined from slightly over $1 billion in 2008 to $893 million in 2010.
As use of checks declined, and along with the credit crunch and great recession beginning in 2008, debit cards grew as one of the most preferred payment methods in the United States. As debit card use grew in the U.S., debit card fraud grew at a more rapid rate. According to the Federal Reserve and FinCEN, from 2006 to 2009 debit card use increased by 14 percent amongst Americans while over the same time frame crimes on debit cards increased by over 40 percent. In 2011 FinCEN received more SARs related to debit card fraud than ever before, however, there were still many more reports filed for check fraud than debit card that year. Since 2008 check use has declined while check fraud losses and reports of check fraud have declined at proportional rates. Debit card use has grown over this same time frame, but growth in reported debit card fraud has increased at a much more rapid rate.
For more information: Check Fraud Crimes Declining, But Debit Card Crimes on the Rise
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