Citigroup Inc. has built up its arsenal against corporate check fraud with special checks meant to make counterfeiters' jobs a lot harder.

Check stock bearing the Check Authentication Mark is being made available to all Citigroup corporate clients. The mark supplements Citigroup's positive-pay service, Match Paid, and signature verification.

The banking company said it prevented more than $63 million of losses in 1999 - it would not say how much it failed to prevent - through signature verification and Match Paid. Match Paid compares check information with a corporation's accounts-payable database as the information is being processed.

"Our clients were looking for additional fraud-prevention capabilities," said Diane Reyes, vice president and North America business manager of Citi's eBusiness division, which developed the service.

Corporate customers that use the new service will be issued checks containing material that can be recognized by Citi's high-speed processing equipment. Checks without the identifying material will be tagged as suspect.

"It is an invisible mark," Ms. Reyes said. "We do not want counterfeit rings to figure out how they can get around it."

Citi spent more than six months developing the service and upgrading its processing equipment to recognize the mark, Ms. Reyes said. It tested the system with a Fortune 1000 client that issues about 30,000 checks a month. It would not disclose the fee customers will pay to use the service.

Banks had $512 million of losses from check fraud in 1997, the last year for which statistics are available from the American Bankers Association.

Superregional and money-center banks are the hardest hit by check fraud, the ABA says. They reported 2,169 cases in 1997 and lost $11.1 million on average, nearly 10 times the losses reported by regionals, according to the ABA.

Steve Ledford, executive vice president of Global Concepts Inc., a check consulting company in Atlanta, said technologies similar to Citi's authentication mark are available, such as computer algorithms embedded on checks' magnetic-ink character-recognition lines. Some banks doctor their checks with unique ultraviolet fluorescent dyes and equip their processing machines to detect the radio waves that these checks are tuned to emit.

"I am glad to see folks like Citi take a step forward and try to get these things in the market," Mr. Ledford said. "It is a step beyond standard security methods like watermarks and microprinting."

Andrew Reeher, vice president at Deluxe Corp., a Minneapolis check printer that supplies about 50% of the U.S. market, likened check fraud to a chess game in which banks and vendors try to anticipate the bad guys' moves.

Check fraud is on the rise, he said, partly because of the increasing capabilities of personal computers, printing equipment, and imaging technology. Crooks are more easily able to replicate checks and even include magnetic codes on the checks by using desktop printers.

"The fraudsters are turning into chemists, and they are pretty good," Mr. Reeher said. "What we try to do is keep the bar as high as possible for fraudsters and make sure they have to be really good if they are to be successful."

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