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#165695 - 03/02/04 08:01 PM
Fraud and Check 21
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Anonymous
Unregistered
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[I'm creating some sub-threads for discussion to get things organized on Check 21 topics.]
How big of an impediment to fighting fraud do you think it will be to not be able to access some original checks?
How often in the last five years, have you actually used a graphic detection specialist to analyze handwriting, ink, pressure, and other elements of an original check?
How do you envision con artists exploiting Check 21 for their benefit?
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#165696 - 03/03/04 04:44 PM
Re: Fraud and Check 21
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Platinum Poster
Joined: Jan 2003
Posts: 525
wish it was the Smoky Mountain...
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I gave a training seminar (so to speak) to 45 local cops & PA's last month regarding this very topic. The only way to not fight the police & PA’s after October is to bet them educated now, just as you have to do the customers. We are monthly meeting to discuss the negatives for criminal investigations, so that we’re all on the same page going forward. They finally bought in to potentially not having originals, but no one is happy about it..The biggest items to tackle were:
· Not having the originals prevents the fuming of checks for fingerprints
· Not being able to scan the ink thumbprint into AFIS or other services
· The digital copy being challenged in court by the defense saying that the digital image can be altered
We are working through these issues now. No perfect answers yet, but the banks, the police and the PA’s are all working together so that we can address these issues now.
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My opinions...you get what you paid for..
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#165698 - 03/04/04 05:25 PM
Re: Fraud and Check 21
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Gold Star
Joined: Oct 2000
Posts: 398
Derry, NH
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Hi there MB. I have some concerns from a fraud viewpoint. Many banks have a threshold for checks that are reviewed prior to payment. Even now, we rely on an image to verify the critical features on the check such as signature, however; we know that we can access the original check. Some counterfeit checks are so close to being real, even our customers are not sure. I am certain that the fraudsters will know about this if they don't already and make use of the fact the bank only looks at an image. I am not taking the "sour grape" view of imaging. From a compliance point of view, some banks are imaging their loan documents - instead of thumbing through a file, I will be able to view it on the intranet. This puts a whole new dimension on compliance reviews.
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Allan D. Virr, CRCM,CRP
Compliance Audit Solutions, LLC
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#165699 - 03/04/04 06:10 PM
Re: Fraud and Check 21
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Anonymous
Unregistered
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Quote:
Hi there MB. I have some concerns from a fraud viewpoint. Many banks have a threshold for checks that are reviewed prior to payment. Even now, we rely on an image to verify the critical features on the check such as signature, however; we know that we can access the original check. Some counterfeit checks are so close to being real, even our customers are not sure. I am certain that the fraudsters will know about this if they don't already and make use of the fact the bank only looks at an image. I am not taking the "sour grape" view of imaging. From a compliance point of view, some banks are imaging their loan documents - instead of thumbing through a file, I will be able to view it on the intranet. This puts a whole new dimension on compliance reviews.
Your points are well taken. And, you know, that threshold (for sight examination) keeps getting higher and higher at most banks as they make risk management decisions based on how much check fraud they're seeing, how much they could catch if they were sight examining certain items, and what the cost would be for them to devote employees to the task. Do they miss some fraudulent checks by not examining every one? Sure. Do the losses outweigh the cost savings gained by not examining? The hope is that they do not.
In a Check 21 environment, thieves will undoubtedly exploit the system. The hope is that the losses that come from thieves exploiting weaknesses inherent in the Check 21 system will be outweighed by the fraud that gets caught/stopped due to Check 21 efficiencies.
Positive pay can help with commercial customers, but its main weakness, to date, has been with the payee line. With some electronic positive pay systems, it's possible to match the payee, in addition to the amount and the check #. On consumer customers, to the extent the amount of an item is large and you're trying to examine it before it's paid, the hope would be that you could locate your customer in time and the customer could confirm whether or not the item was valid. If the customer cannot (based on your description of the payee, amount, check #), they need to do a better job of managing their checkbook. 
I think we all have concerns at this point. But I do think there are many positives to the new law and, ultimately, I believe they will outweigh the negatives.
Several local banks are currently involved in image exchange and presentment on a voluntary basis and it has gone extremely smoothly. Some have been doing it for more than 15 months.
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#165700 - 09/17/04 01:07 PM
Re: Fraud and Check 21
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Member
Joined: Dec 2002
Posts: 95
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Does anyone know if the thumb prints on non-customer items are going to be of any value on a substitute check?
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