With reports of check fraud on the increase, several new technologies were unveiled last week to fight the problem.
The Co-Op Network said it has begun to offer "Deposit Chek," a fraud detection and prevention product from Primary Payment Systems that is being marketed and distributed to credit unions by Co-op Network. It uses a dial-up MICR reader to detect everything from lost, stolen, kited or counterfeit checks to deposited checks on closed accounts. Deposit Chek takes less than 10 seconds to receive the check verification.
In Mounds View, Minn., meanwhile, Liberty Check Printers introduced a new check security feature and revealed it is beta-testing another. Making its debut last week was Liberty's new Thermochromic-or temperature-sensitive-ink. Liberty will imprint the words "Original Document" in red ink on the back of the checks. When a person touches or breathes on the words, they disappear, demonstrating the authenticity of the check. As the security area cools, the words reappear, Liberty said.
The company is also testing another feature called "Secure Record" that purges personal data from duplicate check carbons. According to Liberty, the advantages of that technology are a carbon that no longer looks like a check, no MICR printing on the duplicate, no overprint on the duplicate copy, and a value-added account listing to record the type of account for easier record keeping.
"Despite all of the technological advancements in the financial services arena, there's still a criminal element out there creating new methods for identity takeover, counterfeiting and all types of fraud," said Co-op Network President and CEO Robert Rose, noting the company's goal is that a simple technology like Deposit Chek, which provides advance notification of potential check returns, can become the norm in the credit union industry. "All it takes is a PPS MICR reader and a standard phone line," he said.
Under the system, Deposit Chek provides credit unions with access to the PPS national shared account and transaction database through the PPS dial-up MICR Check Reader. Six credit unions that have been participating in a pilot program have saved "thousands of dollars," according to Jim Hanisch, senior VP-corporate development with the Co-Op Network.
"One credit union avoided accepting $9,000 in checks drawn on closed accounts, another protected nearly $4,000 on checks returned for insufficient funds, and a third stopped the fraudulent opening of a new account with stolen checks," he said. "Deposit Chek lets our credit unions warn good members about deposited checks that are likely to be returned. It's a perfect check loss-prevention tool for any of our members who are experiencing significant fraud losses from deposited or cashed checks and it helps them understand which items or members present the highest risk."
Primary Payment Systems has 140-million deposit accounts in its database.
Similarly, Robert Anderson, president of Liberty, is calling on merchants, other financial institutions and other check printers to team up and fight check fraud. "Credit union members must have the most secure payment method possible," Anderson said.
After initial use on Liberty's catalog check styles, the new thermochromic ink will be progressively introduced across the company's line of credit union custom and business checks. The new feature will join eight other security measures already in place on checks printed by the company, including invisible fibers that can only be seen under ultraviolet light.
