Fraud in the Banking Industry

Table of Contents

Introduction…………………………………………………………………………..……..Pg. 1-2

Current issues in Banking……………………………………………………………………..…..2

Fraud Schemes………………………………………………………………………..................2-3

Prevention and Tips………………………………………………………………….………….3-7

Conclusion………………………………………………………………………………………...8

Introduction

The emergence of online banking and mobile banking has opened up the doors for an increase in fraud. Most banks now hold many ‘paperless’ services including online banking as well as the more recent mobile banking. These services allow the customer to be able to view their statements online, make transactions, pay bills and transfer money via the internet. While these types of services are very convenient, they do also allow lead to an increase in the amount of fraud and identity theft. Banks each have their own strategies to help prevent fraud, but there are always opportunities and are also areas that need to be addressed that are sometimes overlooked.

Before online banking, the biggest threat of fraud involved someone printing fraudulent checks and forging signatures. Since the internet and now smart phones, online fraud has become assorted which makes it more difficult to detect and conquer. The amount of fraud that has showed up on the online banking world has been compared to the amount fraud that originated in the credit/debit card industry (Scheibach 2011).

Mobile banking is the most recent in banking technology. It originally started with banks offering mobile text banking to their customers. Since customers easily transitioned into this method of banking, and due to the increased existence of Smartphones, banks decided to provide an application for customers that they can use on their iPhones, Blackberrys or Droids. This is a free application that allows customers to check account balances, view transactions pay bills and transfer between accounts. Of course now, banks have to ensure that customers know how to utilize this...