SunTrust Service Corp. and Crestar Bank have joined with an Atlanta software company to help fund the development of a system to detect check fraud..
The back-office system, which is being developed by Antinori Software Inc., is designed to flag fraudulent checks that are on banks' demand-deposit account transaction files.
Richmond, Va.-based Crestar and SunTrust Service, a unit of Atlanta-based SunTrust 'Banks Inc., are sharing the costs of designing the system, which totals about $150,000, according 'to Ron Antinori, president of the technology firm.
Bob Nunnally, assistant vice president of legal' operations at Crestar, said that "check fraud is increasing monthly. There's been a tremendous increase in counterfeiting."
Mr. Antinori said that check fraud resulted in an estimated $10 billion in losses last year.
The Antinori system is designed to thwart two kinds of fraud: checks that have been stolen from legitimate accounts and forged, and bogus cheeks that have been created with personal computers, scanners, and color printers.
The software, called the check fraud detection system, tracks patterns in checking accounts and flags unusual activity.
Suspect Items Printed Out
A list of all of the atypical, or suspect, items will be printed so bankers can put a hold on funds by 9 a.m. the next day.
"Every day the daily transaction file is compared against the archive," said Mike Israel, vice president of marketing at Antinori. "That comparison is what generates the suspects."
The system will flag items that don't fit typical account behavior, such as a greater than normal transaction volume or checks that don't fit normal transactio. n patterns.
"One way to track a lot of crooks is to look at serial numbers," said Mr. Israel. The system will look for duplicates.
"If the crooks change the serial number and it's out of whack, the check will get caught."
When a check appears to be forged or stolen, the bank can then call the customer to ask if he or she wrote it. Mr. Antinori said the system is designed to "minimize suspects and maximize probability."
Crestar is now working with Antinori to determine the specific criteria for flagging suspect items, said Mr. Nunnally.
For example, the bank must set a dollar figure for checks it will examine.
SunTrust is in the process of installing the system at its Miami affiliate, and Crestar plans to install it late this summer.
In late 1993, Antinori sponsored a forum on check fraud attended by eight financial institutions and Hurland Corp., a check printer. This spring, it held focus groups with Crestar and SunTrust to define requirements of the system.
Mr. Antinori said that future phases for the software are planned. The company also plans to set up a clearing house where customers can share information about fraud.