Check Fraud: A Growing Concern
Solutions:
Today checks represent the largest dollar volume of all transactions. Although the number of electronic payments surpassed checks in 2004, the real statistic is that checks are an extremely popular form of payment and are being used for high dollar transactions - making them arguably more vulnerable than other payment methods to devastating fraud attempts.
Check-related fraud continues to rise, according to banks, industry groups, and fraud experts alike:
- The latest report from the ABA (2004 ABA Deposit Account Fraud Survey Report) states that attempted check fraud against commercial banks' deposits rose to $5.5 billion in 2003, up from $4.3 billion in 2001. Bank survey respondents with less than $50 billion in assets ranked check fraud as their leading threat. Mid-sized banks experienced the largest increase in check-related losses, experiencing more than 15% growth.
- The latest Nilson report states that check fraud exceeded $20 billion in 2003, up from $12 billion in 1996.
- According to the Association of Financial Professionals Payments Fraud & Control Survey (March 2005), four out of five of the organizations that experienced fraud in the prior year indicated that their highest dollar fraud resulted from checks.
And Unlike electronic debit or credit card fraud, there is no consumer federal protection or standards for dealing with check fraud. The protocols for reporting, investigating, and recovering check fraud losses vary by state and by bank. In addition, prosecuting check fraud criminals can be difficult and costly, or not even possible for lower dollar checks.
Battles fought after check fraud losses have occurred are often difficult to win. The best solution is to consistently stay on alert and proactively take steps to prevent check fraud at all stages of your organization's check processing.
Preventing Check Fraud
Preventing check fraud requires implementing fraud prevention technology and best practices:
1. Use a High-Security Check Printing System
Whether you need to print checks to a single printer, to multiple printers across your network, or to remote locations (via the internet), check printing technology has evolved to offer a suite of advanced security features that address today's check fraud concerns.
A Check 21-compatible Security Watermark feature along with other printed check security features, such as reverse and micro fonts are available with the SecureCheck-Pro MICR Check Printing System and SecureCheck-RCP Remote Check Printing System.
In addition, both SecureCheck systems provide a host of internal controls for fraud prevention that can be securely managed from the Printing Control Center (PCC) to meet your organizations specific requirements for security and SOX Section 404 regulatory compliance: audit trails, event logs, user permissions, email notifications regarding check printing activities, workflow/check-approval processing prior to check printing, electronic check-image archiving, and more.
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SecureCheck-Pro MICR Check Printing System
SecureCheck-RCP Remote Check Printing System
2. Use High-Security Blank Check Stock
Blank check stock has the advantage of being void of all check information aside from the check's many security features, which protects your organization against check alteration and duplication attempts.
TruPrint blank check stock is economical and offers numerous built-in security features for check fraud prevention: void pantograph, fluorescent fibers, microprinting, black/blue dyes, warning borders, multi-language brown stain void, watermark, more.
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TruPrint Security Check Stock
3. Create a Positive Pay Partnership with Your Bank
Positive pay is considered an essential best practice for check fraud prevention. Positive pay forms a partnership between you and your bank by having the bank validate every check it receives for payment against a check issuance file you provide. Discrepancies are flagged for your review and approval prior to payment being made.
Implementing positive pay helps your organization meet UCC Uniform Commercial Code) standards of ordinary care for fraud prevention and gives you leverage to fully recover losses in the event of a check fraud incident.
Positive Pay Software
Creating properly formatted positive pay files and automating regular transmission of files to your bank can be done quickly and easily with positive pay software.
SecurePay is the nation's leading positive pay solution. 8 of the 10 leading U.S. commercial banks currently recommend SecurePay to their customers for rapid and economical implementation of positive pay protection.
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SecurePay Positive Pay Software
4. Implement Best Practices for Check Fraud Prevention
Your organization should implement best practices for preventing check fraud:
- Daily account reconciliation
- Post no debit flags on zero balance or depository accounts
- Controlled access to company payments areas and systems
Consistent system password updates - Awareness of payment procedures and security risks during employee vacations and turnover
- Knowledge of your bank's check destruction policy, imaging system, and check fraud detection practices
- Knowledge of check stock security features, including developments in the area of image-survivable features
In today's changing payments landscape, the most effective check fraud prevention planning combines best-of-class technologies that offer state-of-the-art security features with the best internal practices for secure accounting.
If you have questions, please contact us at 1-800-652-2877.
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