AUSTIN, Texas-Having the technology in place to detect check fraud before it occurs has saved Amplify FCU here approximately $55,000 annually.
"With the consolidation in Fed check-processing centers and the fact that we can now only put a two-day hold on most items because everything is considered local, we needed a way to detect possible returns before we actually received them," explained Amplify's fraud analyst, Liz Boultinghouse. "The risk of only two-day holds is the return timeframe and it takes just a bit longer than two days for a return item to actually reach us."
Boultinghouse explained that the credit union previously experienced instances where the "hold" would be dropped and the funds were removed almost immediately. Later that day or the next day, the check would be returned. "Had we known it was coming back, we could have extended the hold."
The Search For Software
When seeking software to better estimate returns, Amplify followed the lead of its corporate credit union, which suggested the Scottsdale, Ariz.-based Early Warning Services' Deposit Chek Service. Bob Lewis, vice president of financial services, explained that the technology provides advanced notification of potentially high-risk deposits at the point-of-transaction.
This, in turn, enables credit unions to expedite funds availability decisions by validating the existence and status of checking and savings accounts at the time of transaction.
"We rolled out Deposit Chek the first time in 2009, but more recently experienced about a four-month lapse without the service while converting item processors," said Boultinghouse.
With 45,000 members, seven branches and $608 million in assets, Amplify's lapse in service underscored the need for the technology. "During that time, we could have avoided more than $25,000 in charge-back losses alone," said Boultinghouse. "We determined that there was a little more than $18,000 in preventable losses."
Now that the software has been reintegrated with the credit union's new item processor, the Deposit Chek Service has further assisted Boultinghouse who receives and monitors daily reports via the software portal.
"I typically spend 20 to 30 minutes each morning researching items with warnings and placing, extending or removing holds based on the account status responses. That's really not a lot of time considering the tradeoff of what the service does for us."
Employees Get Training
Amplify supports 164 full-time and 34 part-time employees, a handful of whom were trained to review reports and look for warning signs.
"Our employees now get notification of possible returns in enough time to place or extend a hold on the funds, so our losses are minimal," said Boultinghouse. "We can prevent losses by more proactively identifying and then isolating deposit fraud."
To date, Amplify has determined that its annualized loss prevention is $54,000, which is credited to the new fraud-detection software.
