Security Checkpoint
The con is everywhere. No matter what precautions are implemented, the digital world continues to pose new security issues to the identities of its users. And, while banks and financial institutions become more savvy about fraud and regulations, including 2004’s Check 21, the threat of check fraud remains. Due to heavier media coverage, it’s possible the majority of Americans might be more concerned with identity theft than they are with check fraud.
Nevertheless, companies handling secure documents and manufacturing, such as Harvard, Illinois-based Ameriprint, continue to focus on check security. “Our most pressing concern is helping distributors convince their clients that they are potential targets,” said Gary St. Onge, Ameriprint’s vice president of marketing. “Check fraud is still growing at an alarming rate. Current technology makes it easier than ever to counterfeit checks and negotiable documents.” Recently, the same case was made by The National Consumers League, which ranked fake check hoaxes highest among 2006 telemarketing scams, consisting of 31 percent of all telemarketing fraud and third highest among online scams, or 11 percent of all Internet fraud.
To combat such crimes, the passage of Check 21 occurred in 2004, and created much confusion about exactly what the standards entail. According to the Federal Reserve Board, Check 21 was designed to prevent security measures used as fraud safeguards from encumbering the digital imaging process. The standards allow the smooth transition of electronic image check substitutions, but are also troubling because electronic check visibility requires the paper document’s prevention features to drop out during the scanning process.
Because of these changing regulations and the evolution of security technology, manufacturers have had to invest heavily in both the safety of their products and in the careful maintenance of their products’ images. There are also ANSI X9.7 standards to consider, which address imaging and readability. As St. Onge explained, security features that dramatically increase file size, such as foils or holograms, are now less favorable choices for check security.
Not surprisingly, check manufacturers had to comply technologically with the changing standards. “We are partnering with a company called Adlertech International, Inc., of Toronto,” said St. Onge. “They introduced us to several security features that they developed to provide top-level security in the Check 21 environment. Because conventional security features do not transfer to IRDs [image replacement documents], Adlertech created a new technology called SRIS (Scan Resident Image Security). This is the only feature on the market that will transfer to IRDs.”
He went on to explain that SRIS allows the transfer of a security image subtle enough to survive the scan and pass Check 21 requirements. SRIS will allow electronic check substitutes to act essentially as a cancelled check, aiding end-users in validating their payments.
Pyramid Checks & Printing in Portland, Maine, has also increased technological processes by adding software and plates for printing security features. “Cost of the product as it relates to adding the security features [is a pressing concern],” said president Carl LeFevre, “whether the features are printed ... or purchased as part of the stock ... .”
LeFevre noted developments in state government regulations regarding the production of medical prescription pads, which are increasingly complicating document security, as well. “Oftentimes,” he said, “[prescription pads] have mandatory printing and paper security features in them.” The mandatory printing and security features on such products exist for similar reasons check security features are necessary—to protect patient privacy and prevent forgery.
But, the struggle doesn’t only occur for manufacturers; end-users have to juggle security priorities, as well. “Small businesses,” LeFevre noted, “want the same security features of larger companies, but due to the cost of each special feature, they must make choices. [They must decide] what is enough security, and [place] a value on the additional costs that some of the check security features can bring. One of the most important, and perhaps overlooked, aspect[s] with regard to check security for the end-user is storing the checks in a safe location.”
St. Onge advises customers to add eight security features to their checks. “These [features] should include copy prevention, alteration prevention and authentication [components],” he stated. “A warning band should also be included to inform anyone receiving the check to look for these features. Using these combined features not only offers protection from criminals, but may also prevent litigation from banks trying to defer liability back to the end-user.”
In addition to investing in the technology needed to comply with check readability and security measures, companies can encourage the purchase of these products by educating their customers about the severity of check fraud. “Distributors have an excellent opportunity to inform these customers and other prospects of current risks and security solutions,” noted St. Onge. Ameriprint offers seminars, and has invested in testing equipment to ensure “total compliance” under Check 21. However, he admitted the struggle of relaying the threat of fraud to customers who have not been affected by it. “On the other hand,” he said, “businesses that have had that experience will spare no expense to secure their checks and documents.”
End-users, manufacturers and distributors should attempt to remain as vigilant about check security as the criminals continually slipping through prevention feature loopholes. “The more customers do to protect their checks, the safer they will be,” said St. Onge. “The war against check fraud must be fought on every front, including software, hardware, paper and ink.”
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