Security Measures are Fighting to 'Keep It Real'

Distributors can help customers battle check fraud through education and innovation.

Asked for the latest statistics concerning check fraud, Barbara Hurst, executive editor of the newsletter Bankers' Hotline, editor/moderator for BankersOnline.com, and president of Pennsylvania-based Hurst Associates—security and compliance training specialists—responded, "You can get as many guesstimates as there are experts guessing."

Hurst said it's a given within the industry that FBI and American Bankers Association (ABA) figures on the subject are "way, way low," since many losses are not reported but simply charged off.

However, she cited an in-depth study conducted approximately five years ago by U.S. News and World Report which found that financial institutions in the U.S. lose $12 billion a year in check fraud, while the retail industry overall loses double that for a total annual loss of $24 billion. "It's the most comprehensive information we have on this subject, and I've used these figures ever since, even though they, too, are probably low by now," said Hurst.

How is this possible with increasingly sophisticated security features being made available? According to Sandy Horner, president of DiversiForm Software Compatible Checks, Alex-andria, Va., several security features may be available, but the banking industry requires only three of these elements on a check to show due diligence. Horner also noted that banks are not investing enough time and money to train personnel. "Chances are that if you called a bank and asked someone to verify a microline space, he wouldn't know how to gauge it," said Horner.

Be that as it may, the printing industry continues to do its part to prevent the two types of fraudulent check activity—information alteration and counterfeiting (or duplicating) checks.

For instance, instead of the three requisite security features, DiversiForm's checks contain 10 security elements, including a warning band, the padlock icon, micro printing, a security pantograph, a reverse-side security screen and its related warning box, a void pantograph, additional micro printing, chemical-reactive printing and invisible fluorescent fibers for viewing under black light.