Financial institutions can rely on numerous tools and solutions to detect check fraud, but in particular, they need tools that can automatically verify check stock and content details on paper checks and image replacement documents (IRD). This post explains this concepts and looks at how these tools work.
What Is Check Stock Verification?
Check stock verification refers to the process of verifying pre-printed or “stock” details on business and personal checks, and it analyzes the following stock elements:
- Check numbers
- Accountholder name and contact details
- Payee line
- Dollar box
- Payor blocks
- Payor blank
- Signature line
- Memo lines
- Bank information
However, effective check stock verification tools don’t just compare this basic data on the presented check to the input check. Instead, these tools analyze multiple components related to this information such as font type, font size, font spacing, the placement of each item, and the distance between blocks of information, and they detect the smallest variations.
How Does Check Stock Verification Work?
Check stock verification leverages technology to spot aberrations that cannot be detected by the human eye. This process improves the check fraud detection process and alleviates the burden on your in-house anti-fraud team, using the following technologies:
- Image analysis
- Pattern recognition
- Quantitative analysis
- Analytical and geometrical analysis
- Neural networks
Working together, these anti-fraud technologies can efficiently analyze images scanned on different transports. They can reliably compare presented and reference documents even if they have different resolutions or the presented documents have noise, stamps, marks, inscriptions, or other distortions. These smart tools also have the flexibility to deal with complex decision-making schemes, take into account different scenarios when interpreting results, and integrate with other anti-fraud tools.
What Is Check Content Verification?
Check content verification analyzes the content of a check and looks for fraudulent alterations including the following:
- Fraudulent bank officer approval stamps
- Bank officer approval stamps moved from one check to another with a higher value
- False information on the MICR line
- Alteration of written information with a pen such as changing the legal or courtesy amounts
How Does Check Content Verification Work?
Automated check content verification tools compare courtesy and legal amounts, and they can read cursive, printing, and machine type with stunning accuracy. Beyond just looking at shapes and information, these tools fight check fraud by taking into account behavioral characteristics, allowing them to decrease false positives by accurately distinguishing between fraud and usual errors and abbreviations.
Advantages of Automated Check Stock and Content Verification
Automating the verification of check stock and content components helps your financial institution to minimize the risk of check fraud, but it also offers the following advantages:
- Careful analysis of multiple stock and content components on every check presented to your financial institution
- Reduction of false positives
- Regulation of the percentage of false positives to false negatives to improve fraud detection, without detracting from the customer experience
- The ability to work in real-life situations such as analyzing checks with different resolutions or distortions
- The use of behavioral analytics to assess differences between actual fraud and customer errors and abbreviations
- Saving money and resources by reducing unnecessary manual reviews and human intervention
Check fraud costs financial institutions over a billion dollars every year, and according to the American Bankers Association, it accounts for nearly half of deposit account fraud. To detect check fraud, you need tools that will automatically verify the stock and content details on every check presented to your bank.
If you want to decrease losses, improve productivity, and optimize the customer experience, we can help. At SQN Banking Systems, we offer check image analysis tools that can help you reduce check fraud. To learn more, contact us today.