The following internal and external security measures will help minimize your risk of check fraud.
1.Financial institutions should train tellers to look at the check, not the person presenting the check. The check, not the person, is the item that must be verified.
2.Firms accepting checks should be aware of damaged MICR lines. Intentionally damaging the MICR line can increase the time necessary to process an item, giving the forger enough time to leave town. Also be sensitive to discoloration, this could be an indication of alteration.
3.Incorporate security features into your base check stock and utilize printed security features that address both alteration and counterfeiting of original items. A short list of these features would be:
•Warning Bands, or other methods that alert recipients to visual security features
•Artificial or genuine watermarks in the base paper
•Chemical additives in the base paper that react to chemical alteration attempts
•Void Pantographs that address attempts to copy original items
•Unique security fonts that deter attempts to alter payee or amount information
4.When generating final negotiable items,
•The document always includes the amount value in words
•The document should not include information that limits the value range, i.e. “Not valid over $500.” This only guides the fraudulent attempt. Use your application software to detect out of range items
•All levels of hardware and software password protection should be utilized
5.Safeguard check stock paper, and limit access only to necessary employees.
6.Understand and approve the security procedures of your check stock suppliers to safeguard stock in their custody.
7.Use “Positive Pay” check services from your financial institution that match check number and dollar amounts to known information. Financial institutions should encourage full participation of corporate clients.
8.Move methods of fraud detection to the item’s point of entry into the clearing system. For example, low cost readers can detect low magnetic strength in the MICR line which is a good indication of attempts to copy an original.
9.Always verify the home address and place of employment of new account applicants. Use public sources such as phone books to verify phone numbers. Ask new account applicants why they are opening an account with your institution. Be suspect of unusual answers or delays in responding.
ST Secure MICR Printer User’s Guide | 16 | 2006, Source Technologies |
March 2006 |
| All Rights Reserved |