Almost a third of small business owners have encountered check fraud this year as trust in digital security continues to slide, according to a new benchmark report by mobile deposit leader Mitek.
To track the latest trends in fraud prevention, the firm analyzed survey responses from 3,001 consumers and 545 small business owners in the U.S. In the latter group, 31% claimed to have become victims of check fraud in 2023. Of those affected, 65% said their ensuing losses surpassed $50,000. The high numbers coincide with a surge in fraud activity across the U.S. In its press release, Mitek noted that the U.S. Treasury Department’s Financial Crimes Enforcement Network division tracked more than 680,000 Suspicious Activity Reports relating to check fraud in 2022, an increase of nearly 200% from the previous year.
The increase in criminal activity has made small business owners and their consumers feel less safe when submitting private information. In Mitek’s survey, 47% of entrepreneurs called check fraud a “big concern,” while 80% of shoppers expressed anxieties over the security of their personal data. In recent years, criminals have also started to target small businesses more often, particularly through digital means. According to the Identify Theft Resource Center, 73% of 551 entrepreneurs claimed to have encountered a cyberattack in 2023, a three-year high and a 3% increase from 2022. Among the victims, 42% reported revenue losses, while another 32% experienced an erosion of trust among their customers.
To protect their operations from check fraud, small business owners have a variety of tools and practices at their disposal. American Family Insurance recommends that entrepreneurs work closely with their banks to identify suspicious withdrawals and either cancel or refund the payment. Small businesses can also prevent fraud before it happens by implementing safety procedures such as keeping sensitive information under lock and key and moving to paperless payment systems.
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