The Financial Services Technology Consortium (FSTC) announced today it has completed a major project in its quest to identify fraudulent checks before they enter the payments system. A key element in achieving this goal is to ensure interoperability between banks when communicating about a suspicious check. This landmark project paves the way for the development of formal standards for check verification between institutions, and potentially to merchants and others who accept checks as payees.
"By leveraging the opportunities presented in an image environment, financial institutions can now combat check fraud with state-of-the-art technology, identified and tested by an industry-wide collaborative effort," said Rick Pickens, Senior Vice President, Liability Risk Management, Bank of America. "Financial institutions will be able to offer a new level of protection to a customer’s check having a security mark. In addition, improved customer protection against counterfeits, forgeries and alterations will make it more difficult for the fraudster."
As the financial services industry moves to exchange check images and reduces reliance on paper-based security features and controls that provided fraud protection over the years, image-survivable features play a critical role in maintaining the integrity of check payments. This important project enables financial institutions to use the next-generation of image-survivable features to better protect their customers, merchants, and other check receivers from loss.
"The Financial Services Technology Consortium’s proposed national standard is a major step forward in reducing check fraud," said Blake Prichard, Executive Vice President at the Federal Reserve Bank of Philadelphia. Prichard encourages financial institutions to consider adopting pilot programs to test this draft standard and gain immediate check fraud protections for their customers. "Pilots implemented now within a banking organization, and then between financial institutions, and finally among merchants and others will gradually increase the standard’s benefits. The result should be a significant reduction in check fraud activity," continued Prichard.
This landmark effort, included nineteen financial institutions, technology vendors, and federal agencies -- Advanced Software Design Corporation (ASD), Bank of America, BB&T, Canadian Payments Association, Cheque Guard, Clarke American, Compass Bank, Deluxe, Federal Reserve, First Citizens Bank, Fiserv Imagesoft, U.S. Treasury’s Financial Management Service, John H. Harland Company, JPMorgan Chase, NCR, The National Clearing House, Primary Payment Systems, Softpro, and SQN Banking Systems.
"We are constantly looking for ways to mitigate fraud and keep our clients’ financial systems safe,” said Glen Sgambati, Chief Data Officer, Primary Payment Systems, Inc. (PPS), an affiliate of First Data Corp. “Fraud reduction is not a competitive issue and this industry-wide collaborative initiative empowers the financial services community to share information to help protect their customers, institutions and the industry as a whole."