Harland Unveils Plans For Anti-Fraud Technology

Credit Union Magazine
November 19, 2004

John H. Harland Co., Atlanta, is in the final stages of developing a comprehensive solution for the prevention of the most difficult-to-catch type of check fraud: the forgery of the maker’s signature.

This self-authenticating solution employs sophisticated image processing, data encoding and encryption, digital printing, and statistical validation software to allow financial institutions and merchants to validate the authenticity of the maker’s signature and the physical check document. The true value of the solution is that the check can be securely authenticated at any time, at any place, with no online connection required to the paying financial institution. The check becomes self-authenticating with the combination of the digitally printed security feature and the software.

Harland is preparing the solution for a pilot program that will lead to its availability in the second half of 2005.

“We believe that our approach to check fraud prevention is the first and only solution capable of catching forged checks at any point at which the item is presented or processed,” says John Heald, president of Harland Printed Products. “This innovation has the potential to dramatically limit fraud losses to merchants, financial institutions and most importantly, consumers, all without requiring any change in consumer behavior.”

Financial institutions, merchants, and consumers lose billions of dollars every year as a result of lost, stolen, or counterfeit checks cashed or presented by forgers. In most cases, the fraudulent activity isn’t realized until the consumer’s funds are depleted, or until the unauthorized items are noticed in their monthly statement. In either case, it’s too late to prevent the fraud. The financial institution is left with the time-consuming chore of investigating the fraud, potentially covering the loss, and trying to reassure and retain their member.

Historically, the validity of the accountholder’s signature on the check has been challenging to verify for the vast majority of checks written. There are two reasons for this. First, due to the sheer volume of items processed, the financial institution upon which a check is drawn typically has not had the resources or capacity to compare the signature on each item cleared to the valid signature on file for the consumer. Second, only the consumer’s institution knows what the consumer's valid signature looks like. Therefore, if the check is presented, deposited or cashed at any other merchant or institution, there has been no way to validate the authenticity of the signature.

In developing this solution, Harland has worked closely with its strategic partner, Mitek Systems Inc., a Poway, California, provider of check imaging, character recognition, and signature validation technology. Earlier this year, Harland acquired selected assets associated with Mitek’s item processing and document imaging solutions CheckQuest® and CaptureQuest®.

With the advent of Check 21, the number of checks that are converted to images is expected to increase exponentially, with significant growth expected at the point of presentment. Financial institutions and merchants are optimistic about the economies this promises in improved check clearing efficiency and funds availability. The added benefit of the shift to more widespread image capture, earlier in the process, is the opportunity to apply technology such as Harland’s to the problem of check fraud at the point in time the item is presented. Because Harland’s laser-printed digital security feature survives the imaging process, the item can be validated at any point downstream in the clearing process, whether or not the item was validated at the time it was accepted.

Reprinted with permission from Credit Union Magazine (November 2004) at creditunionmagazine.com.