The Federal Reserve’s latest Financial Services Risk Officer Survey delivers a blunt message: fraud is not easing. In fact, the report found that no major fraud event category is declining, as financial institutions continue to report pressure across payment channels from impersonation, social engineering, credential compromise, and other evolving tactics.
That matters because banks have spent years hoping stronger controls would gradually force fraud downward. The latest data suggests the opposite. According to the Federal Reserve, debit cards remained the most commonly cited source of fraud attempts and losses, while checks remained the second most frequently reported fraud type. Meanwhile, faster payments showed the sharpest year-over-year increase in attempted fraud and associated losses, reinforcing that newer rails are adding risk rather than replacing it.
For community banks, that is the real takeaway. This is not just a check fraud issue. It is not just a digital fraud issue. It is a compounding fraud environment where legacy payment risks remain active while newer channels expand the attack surface. The survey’s broader conclusion is that fraud pressure is rising across major payment channels rather than shifting neatly from one channel to another.
Checks are a clear example. The Federal Reserve reported that 32% of institutions saw increases in counterfeit checks, 21% saw increases in check washing, and 18% saw increases in payee forgery. The underlying exposure remains widespread: 89% of respondents reported payee forgery, 83% reported check washing, and check fraud remained one of the most persistent payment risks in the study. The survey also found that new-account fraud remained persistent or increasing at more institutions than last year, which is an important warning sign as fraud increasingly moves upstream into onboarding and account-opening activity.
That aligns with the broader market. The 2025 AFP Payments Fraud and Control Survey found that 79% of organizations experienced attempted or actual payments fraud in 2024, and 63% experienced check fraud. Just as important, checks are not disappearing from real-world use: 91% of organizations reported using checks, and 75% said they had no immediate plans to stop using them in the next two years. Fraud risk remains high because the payment type remains deeply embedded in business operations.
There is a temptation to assume paper checks will simply fade away and take the problem with them. That would be a mistake. Even after the federal government’s shift away from most paper check disbursements in late 2025, checks remain active in the broader payments ecosystem—and still attractive to criminals. The IRS says the government generally stopped issuing paper refund checks for individual taxpayers after September 30, 2025, but limited exceptions remain.
So what should banks do with this?
First, fraud strategy needs to move beyond siloed controls. The Federal Reserve points to a practical mix of responses already being used across the industry, including AI image analysis and image forensics, Positive Pay, manual reviews and staff training, and enhanced monitoring of new-account transactions. That is the right framework because fraud now crosses onboarding, payment initiation, item review, exception handling, and frontline decision-making.
Second, banks should care less about whether a tool detects fraud and more about when it detects fraud. Detection after funds move is still useful, but it is mostly cleanup. The stronger operational position is to identify suspicious activity earlier, before settlement, before account impact, and before staff are pulled into recovery, documentation, and customer remediation. In checks, that means looking closely at image-level anomalies and suspicious items before they become losses. In ACH and other digital channels, it means monitoring account behavior, transaction patterns, and anomaly signals early enough to intervene. This is increasingly important as faster payments compress the time institutions have to react.
Third, institutions should resist the idea that more spending alone will fix the problem. The issue is not simply budget size. It is coordination. A bank can add tools and still remain exposed if fraud review, image analysis, onboarding controls, account monitoring, and frontline teams are all operating in separate lanes. The institutions best positioned going forward will be the ones that connect those layers into a more unified operating model. That might include earlier visibility into suspicious checks, stronger monitoring of new and changing account behavior, and better intelligence at the teller line or review queue rather than only after exceptions pile up. This aligns with the Federal Reserve’s finding that fraud pressures continue to outpace any single control point.
The Federal Reserve report does not leave much room for wishful thinking. Fraud is not declining. No major category is moving in the right direction. Community banks do not need broader promises or generic reassurance. They need practical, connected controls that reflect how fraud actually enters the institution and how quickly it now moves.
The banks that respond best will be the ones that stop treating fraud as a series of separate problems and start treating it as a persistent operating condition. Because at this point, that is exactly what it is.