What we learned from our research
Check 21 legislation and advancements in check imaging pose challenges, particularly in the fraud prevention and fraud detection area. Recognition technology presents effective means for financial institutions to maintain the highest level of account security. Another important benefit brought by automated check recognition is that fraud filters can be applied not only at the back office, but at the front office. For example, positive pay can be integrated into the financial institution’s branch system to detect fraud at the teller window or platform. When positive pay is extended from the back room to the branch, a check presented for cash at the branch mitigates fraud even further by using the payee information available to the teller at the branch.
The teller can compare not only the amount and check number, but also the payee on the check against the payee information in the issue file to make a pay/no-pay decision on the spot. Similarly, checks can be screened against electronic signature files and by check stock verification filter tools at the teller window, the retailer’s point-of-sale, or the company’s accounts receivable department.
There is an arsenal of reliable and cost-effective automated tools that can effectively prevent and detect check fraud. Financial institutions using these technologies show that the benefits are numerous and include timely fraud prevention, the mitigation of fraud losses, protection of the bank’s assets, and improved customer loyalty.
