In the continuous struggle against check fraud, a recent development may help address an underappreciated risk area.

ParaScript, known for its AI-driven document processing technology, has introduced a feature designed to detect and interpret handwritten or stamped endorsements on the back of checks. This update enhances Parascript’s check recognition solution, CheckXpert.AI, enabling it to identify phrases such as “For mobile deposit only” or “Deposit only to account of payee.” The system automatically detects the check’s orientation and matches the text against a customizable list of authorized phrases. Endorsements that appear missing, suspicious, or unauthorized are flagged immediately.

This improvement ensures checks are deposited through appropriate channels, reducing the risk of fraud. However, it’s worth noting that this tool doesn’t verify handwriting authenticity or match signatures to those on file—capabilities provided by some other tools.

A Practical Enhancement

The automation of endorsement verification for remote deposits is a significant practical benefit.

“Most fraud tools focus on signatures or altered fields, but this fills a minor gap by ensuring the check’s back matches what it should,” said Jennifer Pitt, Senior Analyst of Fraud Management at Javelin Strategy & Research. “It does this in real time, meaning issues can be flagged before the check is accepted, rather than caught later during back-office review.”

“While not a major advance in handwriting analysis, it’s a practical improvement,” she added. “For banks handling high volume or stringent compliance requirements, it helps reduce manual reviews and ensures basic controls are applied more consistently.”

AI Progression

AI is increasingly critical in combating check fraud. The federal government remains a significant user of paper checks, with 23% of benefit recipients receiving assistance through this medium. They have successfully employed AI to detect such fraud, achieving very positive results. According to CNN, machine learning technology helped the Treasury recover $1 billion in check fraud during fiscal 2024—nearly triple the amount recovered in the previous year.

Banks issue nearly 700,000 reports of check fraud annually. Yet, many organizations still do not take this type of crime seriously. Only 22% of companies surveyed by Javelin said they use check fraud detection solutions.