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How to Avoid Check Fraud in the Digital-Imaging Age

By Christina P. O’Neill

Instant availability of funds is and always has been a great marketing move. Today banks of all sizes struggle to replace lost fee income. They’re expanding their target market for check capture services from well-known, trusted users to broader mass market. But it isn’t 2004 anymore. Now, practically everyone carries a high-resolution camera within their mobile phone. Would-be thieves don’t even have to walk into the lobby with a note – they can rob the bank from the parking lot. And then go down the street and do it again at another bank.
Ben Knieff is director of product marketing for NICE Actimize, a leading financial crime, risk and compliance solutions provider. The cost of imaging technology has come down as the quality has gone up, he says, making it easier for small and midsized banks to partner with third party providers to provide once-premier check-clearing services to a broader market base at an economical cost.
That doesn’t mean risk has gone away. “The bad guys know that the big players talk to each other,” he says. “They will try to attack the smaller organizations, and double-present items at two different community banks that they don’t think are talking to each other.”
Offering image capture to consumers makes the problem more challenging, he says. A fraudster can present multiple items to dozens of institutions nearly simultaneously, creating a challenge to identify and verify the bank of first deposit.
But banks have choices on how fast they need to make funds available. “They can tighten up availability without massive negative impact on legitimate users,” Knieff says. “Banks don’t have to make the same decisions for every customer. An organization deploying the right technology can dial that decision to specific customers and specific items. … ‘This check looks dodgy – hold off on it. That one is a payroll check to a well-established customer; make it available.’ It’s a much finer level of granularity that maintains a good, positive customer experience while dialing back the risk.” n

Posted on Thursday, April 19, 2012 (Archive on Wednesday, July 18, 2012)
Posted by Scott  Contributed by Scott


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