Tennessee Banks Jumping On Thumb print Bandwagon

Tennessee bankers are preparing a statewide fraud-prevention program.

On Oct. 1 some of the state's largest banking companies, including Union Planters Corp. and First Tennessee National Corp., will introduce thumbprinting for noncustomer check cashing. Several community banks have also signed up.

The goal is to lower the losses from check-cashing fraud, which amount to almost $20 million a year in Tennessee, said Bradley L. Barrett, executive vice president of the Tennessee Bankers Association.

"There are some significant losses out there," he said.

Banks in more than two dozen states have started requiring noncustomers to ink their thumbprints on the checks they're trying to cash. The idea is to discourage check fraud and help catch perpetrators. Nationally, check- cashing fraud losses are estimated to total more than $1 billion a year.

"We're seeing more and more of these counterfeit checks," said Ralph Horn, the chief executive officer of Memphis-based First Tennessee. "We're trying to figure out anything we can to stop the fraud that is going on."

Tennessee's neighbor to the south, Mississippi, is also preparing a thumbprinting program. The state bankers association there signed an agreement last week to market thumbprinting materials to its member banks.

This year Gulfport, Miss.-based Hancock Holding Co., which has about $2.4 billion of assets, started using thumbprinting to combat fraud.

Hancock's experience spurred interest at other banks in the state, said Chad Driskoll, director of government relations with the Mississippi Bankers Association. His group is preparing to market a program to member bankers, but no launch date has been set, he said.

The Mississippi group is using materials provided by the American Bankers Association; Tennessee bankers have chosen materials designed and sold by the Texas Bankers Association.

Bankers say the thumbprinting programs are succeeding. Last month the Clearing House Association of the Southwest published results from a study of six banks that implemented programs. The Houston-based group compared check-fraud losses from before and after thumbprinting went into effect. Losses fell 47%, said Joe Fenninger, the group's director of loss avoidance.

As the number of banks with thumbprinting grows, so does acceptance of the practice, but there has been controversy. Charlotte, N.C.-based First Union Corp., one of the most aggressive implementers of thumbprinting, has come under fire in Georgia and New Jersey. First Union has continued to expand the program, however.

"I think people are initially surprised because it is associated with something police do with criminals," said John Hall, a spokesman for the American Bankers Association. "But this is a very successful program. It effectively shuts out check-fraud and scam artists from passing these bad checks."

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