A Check(ered) Past
New security features are essential to fighting check fraud
August 2009 By Melissa BuschSAFEChecks' security policies and ordering procedures also protect against fraud. Johnson stated the company never sells checks that are 100 percent blank because they are known as uncontrolled check stock and are considered a major source of fraud. Johnson continued, saying, "If a company needs blank check stock because it has software that produces [its] name, MICR line, etc., we will still customize the front of the check in some small way to make it unique to [its] organization. Also, if we are not numbering the check on the front with a MICR line, we always put inventory control numbers on the back of the check to provide internal accountability for the client."
Secondly, SAFEChecks always verifies the account number and shipping address of every new order and every re-order with a change of address to ensure checks are not ordered by unauthorized persons and sent to fraudulent addresses.
SICPA offers many types of security inks for added protection against check fraud.
"The type and amount of features that we would suggest for a check is dependent on the level of security needed, as well as the knowledge of how the check is being counterfeited," Labrant explained.
Some options include: thermochromic inks, watermark inks, visible and invisible fluorescent inks, IR transparent inks or secure numbering inks. The latest and most popular are SEL inks that are used to print the "VOID" pantograph background and are sensitive to chemicals and erasers typically used to alter documents, Labrant said.
Though security is the top priority for SAFEChecks and its clients, Johnson announced the company's efficiency also gives it a leg up on its competitors.
"We have the ability to turn around a high-security check order in one day, or the same day if called [in] before noon," Johnson enthused. "SAFEChecks is different from other check manufacturers. We did not begin as a printer trying to capture a new market niche by adding some security features to checks. We began as bankers facing skyrocketing fraud losses, and creating ways to prevent them. ... While no product, policy or program can provide 100 percent protection, our customers know that [our] materials will help them build the strongest defense possible against criminals involved in check fraud."
SICPA's global presence and ability to develop technology relevant to industry demands separate the company from others in the field.
"There are other ink companies that provide security inks," Labrant said. "However, SICPA is the only ink company fully dedicated to developing and implementing security technology. We only manufacture security inks and integrated systems. Providing security solutions for printed products as well as for securing major brands is SICPA's core business."
It's Not Always Easy
Check security doesn't come without its challenges. For instance, some companies fail to understand the slightly higher prices they pay upfront for high-security checks are significantly less than the attorneys' fees they would have to pay if they were victims of check fraud, Johnson declared.
"As people become more educated regarding the legal realities of check fraud liability, they will be willing to pay the slightly higher prices for high-security checks," Johnson continued.
Labrant believes standardization is the biggest hurdle. With no standardization, he went on to say, it is difficult for tellers and point-of-sale clerks to know what to look for when determining the authenticity of a check. As a result, they often are not equipped or knowledgeable to recognize fraud.
"Standardization is difficult to implement with the multitude of banks we have in this country alone," Labrant emphasized. "Adding security is an added cost, which many banks are uninterested in accept[ing]."
While challenges exist, these businesses do not consider the nation's push for greener practices as one of them. Johnson does not feel a shift to green is negatively impacting business. In fact, even as more and more businesses move to electronic forms of payment, she explained corporate check usage continues to climb.
"The demise of the paper check was predicted in 1973. Now, over 35 years later, not only are checks still being used, they represent the largest category of non-cash payment instruments. Not surprisingly, check fraud—the paper check's evil twin—is the most dominant method of fraudulent payments and produces the greatest financial losses. We believe the need for high security checks will [be] here for decades to come," she said.
Unlike its corporate counterpart, Labrant pointed out the check market in the area of personal checks is declining. "The baby boomers are the last generation that will be writing checks on a regular basis," he remarked. "Young adults graduating from college today often aren't using checks with all of the electronic options there are. Of course there will always be some checks, mostly of the corporate, payroll or business-to-business type. We expect that the future is in plastic cards (debit, credit, gift, etc.)."
Most importantly, Johnson concluded companies must be on high alert for check fraud. "Most check fraud can be prevented by using high-security checks, secure check writing software, Positive Pay and tight internal controls. Prevention is the only workable solution, and our products and services can help create the strongest defense possible against this crime."
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