Check 21 & Fraud Reduction -- Primary Payment Systems

To date, much has been written on the direct and indirect benefits of Check 21. Many bankers have even been led to believe that upon becoming image-enabled, a bank's exposure to fraud losses will be greatly reduced or even eliminated. While there are numerous positive aspects to this legislation, those who subscribe to this assumption could find themselves vulnerable to a host of fraudulent schemes.

For example, Check 21 can be expected to cut the time and cost involved in physically transporting paper items and to reduce float, especially in cases in which items were not already being delivered same-day or overnight. But for a variety of reasons, imaged items may not be posted as quickly as they are received. The day or more from the time an image is received until it is posted still represents a window of opportunity for the criminal element to exploit. If history has shown us anything, it is that fraud will evolve as criminals regroup and exploit new weaknesses and vulnerabilities.