A Telling Tool Against Check Fraud
LINDEN, N.J. — Stricter authentication rules around e-signature and detecting check fraud sooner-at the teller line-will go a long way toward reducing the CU's fraud loses in 2011, according to John Levy.
The EVP of Integrated Media Management discussed a simple solution that will improve the credit union's ability to catch check fraud. "Credit unions need to be more proactive than reactive. When tellers capture a check at the branch, they are truncating checks sooner rather than later-that's where they can catch a fraudulent check before it makes it to the back office. Tellers should be trained on how to take this step."
Tellers can turn the member's check away at that point and save both the CU and the member money and inconvenience. "Once a fraud hits the system there is a cost to taking care of it to the credit union and member," reminded Levy. "Do this up front and it is a nice service to the member."
Time To Toughen Up
Levy suggested that many credit unions' e-signature standards should be toughened. "Just because e-Sign says it's legal, you can't just be OK with the process. It may be a very untrustworthy signature process."
Levy stressed that many e-signature processes fail and fraudsters get in the system because "the member is not truly authenticated on the server side. Members can be authenticated by a person in the call center, who asks 'What is your favorite color?' and as long as you answer a couple questions right every time you click on an e-signature a script of your name populates that field."
IMM does not believe that is a secure process, said Levy.
"We feel you can truly authenticate individuals at the server and then allow them to establish their digital identity," Levy explained "Documents signed at our client credit unions use a PKI (public key infrastructure) digital signature. In our process, the member is the only one who has the ability to sign each documents — and it's not sign once and populate all. Each time the member signs we imbed a true certificate into the document."