Robert Randolph, a former federal gumshoe, no longer pursues Arab terrorists or interstate theft rings. But as manager of investigative services for BankAmerica Corp.'s Southwest region, he still fingerprints people.
Under the guidance of the 50 year-old executive, the bank has created a program requiring a "print signature" from any noncustomer cashing a check against a Bank of America account.
Since its inception in January 1994, the program has had its critics. But encouraged by a 42% reduction in annual fraud losses at one of its units, Bank of America believes the program's benefits far outweigh its drawbacks.
The program is an example of the lengths to which financial institutions will go to stem the tide of check fraud, which in 1993 cost financial institutions more than $800 million, according to the American Bankers Association.
"The inherent unreliability of paper is something we must accept," said Mr. Randolph. "Anything produced on paper can be counterfeited, but it's virtually impossible to fake fingerprints."
The fingerprinting technique was put to use most effectively in Bank of America's Las Vegas branches, which were hit by more than $65,000 in counterfeit and forged check losses in 1993, according to Randy Dawson, a Las Vegas-based executive vice president.
Based on dramatic fraud reductions in Las Vegas, the program has since been expanded to all 46 southern Nevada branches. BankAmerica may also employ the program in the rest of the its Southwest territory, including Arizona, New Mexico, and Texas.
Bank of America's experience with fingerprinting has led the security committee of the Arizona Bankers Association to recommend the use of similar measures to its 28 member banks.
Gordon Murphy, executive vice president of the Arizona association, said that the recommendation comes in response to increasing check fraud losses in the state.
The FBI began categorizing check fraud losses in 1993. The bureau's records are based on "criminal referrals," which are criminal incidents involving $1,000 or more. Financial institutions are required to report these losses.
From October 1993 to November 1994, Arizona's financial institutions reported $10.5 million in losses caused by fraud, according to the bureau.
Of that total, reported losses from forged and counterfeit checks amounted to $7 million. All other categories, including encoding errors, embezzlement, mysterious disappearances, credit card fraud, and miscellaneous fraud, accounted for $3.5 million of losses.
In the same period, 1,110 criminal referrals were reported for forged and counterfeit checks. 1,055 criminal referrals were reported in other loss categories.
James Whalen, an FBI supervisor based in Phoenix, said the numbers for reported losses are indicative of a nationwide trend in which technology plays a central role.
Check fraud - especially counterfeiting - is growing because of the proliferation of desktop publishing and other printing technologies that are available to the average person, he said.
Counterfeiters usually belong to check fraud rings, which solicit local consumers to pass bad items, Mr. Whalen said.
These fraud rings breeze into a community, strike, and depart, often leaving large check fraud losses in their wake, he said. "In a period of a couple of weeks, they can walk away with hundreds of thousands of dollars."
While check counterfeiting has become a serious problem, in terms of losses, it is far outstripped by check forgeries.
The FBI reports that, from October 1993 to September 1994, losses from forged checks - in which a person steals checks and fakes a signature - amounted to $4.3 million. Losses from counterfeit items - phony checks manufactured using computers and copying machines - totaled approximately $970,000 for the same period.
The FBI estimates that, using fingerprints, financial institutions can cut check fraud losses by 50% - and that is if they only fingerprint noncustomers.
If they also fingerprint new customers when they open accounts, the reductions could be even larger, Mr. Whalen said.
The fingerprinting works like this:
At branches of Bank of America Nevada, a $4.5 billion asset institution, each teller is equipped with a small round pad resembling a makeup compact. They contain an inkless substance that produces fingerprints.
The pads, made by such companies as Signature Security, Inc., based in Omaha and Identicator Corp. of San Bruno, Calif., are relatively inexpensive, said Mr. Randolph. The average branch can be equipped for under $100.
When a noncustomer presents a check, the person is asked to place an index finger on the pad and is directed to touch the memo area on the front of the check, leaving a print behind. The inkless substance easily flakes off fingers.
If a check bounces, and foul play is involved, police can compare the print on file at the bank with their own data base of prints.
Forgers tend to have criminal records, experts said. The state of Arizona is using an automated fingerprint system, so if the passer of a bad check has been fingerprinted by police, a match can be easily found. Eventually, the Arizona system will be connected with other states', so that nationwide searches can be done.
If a person refuses to give a fingerprint, the bank will not cash a check, but few have refused so far. Of the 56,000 checks presented by noncustomers during the first nine months of 1994, only 345 persons - less than 1% - declined to provide the fingerprint, according to Bank of America.
The bank has fielded six formal complaints by individuals who charge the program is a violation of privacy or prejudicial.
Overall, however, response from customers has been positive, said Mr. Randolph.
"People don't like the idea of someone posing as them," he said. "They understand we're protecting them."
Another bank that is considering using fingerprints - for new account customers, as well as noncustomers cashing checks - is Phoenix-based First Interstate, a unit of $55.8 billion-asset First Interstate Corp.
Walter Heilner, vice president and security director of the bank's Southwest region, said that in 1994 check fraud losses in the five states increased by more than $1 million over the previous year.
The bank will recommend that all its retail branches in Arizona use the program, he said.
Mr. Heilner sees the fingerprinting program as a protection for the bank's customers. With the potential for impersonation, aided by easily produced fake IDs, "the burden of proof is often on the customer to prove that he didn't take the money," he said.
The bank is considering initiating a pilot program in the Phoenix area, which has about 100 branches.
BankAmerica's Mr. Randolph echoes a prediction made by others that banks, encouraged by improving image technology, will eventually move to digital fingerprinting.
"I foresee credit cards with built-in encryption and digitized fingerprints of cardholders," he said.
Fingerprints may ultimately replace personal identification numbers at ATMs, he said, and print and voice signatures may become long-term security solutions for accessing and moving data.
"This business is a chess game," he said. "We need to be proactive and become technologically equal to the bad guys out there. Waiting until after we get burned is too late."
