Lead Forensics

Financial Industry Warned of Continuing Fraud

More than 50 delegates from the UK’s leading banks and other financial organisations have been told that mandating fraud measures such as UCN Plus• would help stay one step ahead of fraudsters. That was one of the many warnings shared at The 7th Annual Conference for Cheque Imaging & Remote Deposit Capture, held last week in Central London.

The event was hosted by The TALL Group of Companies, the UK leader in the provision of secure paper and electronic payment solutions, in conjunction with Digital Check Corporation, a worldwide leader in the manufacture of cheque scanners.

The event hosted at the RSA was the first TALL conference to be ‘live’ streamed and brought together delegates from across the financial sector in the purpose-built auditorium.

The annual seminar is designed to help financial institutions, the banking community, building societies and major cheque users, understand the realities of image capture – following the full roll-out of the new Image Clearing System (ICS).

Julie Grout from Pay.UK kicked off proceedings with an update on Cheque Usage and The Image Clearing System. Successful fraud volume has decreased to the lowest seen since October 2017 when the new ICS launched.  But warned continuing fraud using counterfeits is still dominating, closely followed by forgeries. 

The audience heard from experts at DXC (NatWest Group’s cheque clearing hub) where they also agreed the biggest challenge to the ICS was forgeries.  To combat this the introduction of Image Survivable Features (ISF’s) such as symbols, letters, numbers or QR codes printed onto cheques has reduced fraud by 80%.

Sean Dore from HSBC UK shared his perspective on cheque experience during and post pandemic.  He explained that cheques still represent a sustainable body of payments yet continuing fraud remains the number one challenge.

Finally, delegates heard from Martin Ruda, Managing Director of the TALL Group of Companies.  Although as a result of the pandemic, the use of cheques has momentarily declined, there are still some payments when a cheque is possibly the right and only choice: –

  • When payee name and address is the only information available
  • When the payer is obliged to make a small payment and the payee is left to decide whether to bank the sum
  • When a written record of the transaction is required to be appended to the payment

Martin explained, “In order to manage the decline of the cheque there needs to be a standardised, homogenised and bolted together solution. It will reduce the risk of the gap between issuance and clearance which is the gap that fraudsters occupy.”

He went on, “Fraudsters have specifically targeted the weak spots of ICS, however with the lowest fraud figures since 2017, the industry is doing a good job.   The industry must strive to stay one step ahead of the fraudsters by reinforcing existing anti-fraud features, by investing in the innovative ISF tools such as the TALL Group’s UCN Plus®, and by working more closely together.”

New Cheque Fraud Protection Technology

Communications Specialist Becomes First Firm To Use Brand New Fraud Protection Technology

Core Retail, the leading supplier of pre-paid SIMs and mobile accessories, has become the first organisation to deploy a brand-new payments tool that automatically flags and rejects counterfeit, forged and fraudulently altered cheques. UCN Plus® – patents pending – was officially launched last month by The TALL Group of Companies, the UK’s leading provider of secure electronic and paper payments solutions, and DIA Europe, providers of the Kappa cheque fraud prevention platform.

The communications specialist has a long-standing relationship with Checkprint (a member of the TALL Group of Companies) to securely print, personalise, infill and mail their cheques through the Checkprint Bureau Service. As part of the updated agreement, Checkprint will now incorporate UCN Plus® as part of its service offering to Core Retail.

UCN Plus® enables the variable payment data – payee name, amount, date, etc – to be encrypted and hidden within a QR code printed on the face of all cheques issued by the TALL Group on behalf of its cheque bureau customers. Once the recipient has deposited the cheque, Kappa’s profiling and matching tool alerts the issuing bank to any mismatch, and customers can review the item before committing to pay, and still remain within the new two-day clearing cycle. This reduced clearing cycle forms part of the Image Clearing System (ICS), which was officially introduced across the UK last October. As part of ICS, cheques are now digitised at the point of deposit, and are no longer be transported during the clearing process.

UCNPlus+ Cheque Fraud Prevention Tool

Jonathan Lovell, Chief Financial Officer at Core Retail, said: “We are delighted to be working with Checkprint and the inclusion of the UCN Plus® on our cheques adds an extra level of security. We have always put innovation and serving our customers at the heart of what we do. We believe this will continue to ensure Core’s expansion well into the future. By embracing this innovative approach to cheque security, we are matching our own future ideals.”

Martin Ruda, Group Managing Director at the TALL Group of Companies, said: “As an organisation committed to the safety, security and integrity of the cheque payments system, the collaboration with Kappa has enabled us to deliver a further and critical layer of fraud prevention to the UK’s corporate cheque users. The benefits of the new Image Clearing System will underpin the continuing effectiveness of the cheque as a payment tool, and the TALL Group will strive to ensure the UK payments systems stay one step ahead of the fraudster.”

The TALL Group Launches Innovative Cheque Fraud Prevention Tool

TALL Group Partners with DIA Europe to Launch Innovative Cheque Fraud Prevention Tool – UCN Plus®

UCNPlus+ Cheque Fraud Prevention Tool

The TALL Group of Companies, the UK’s leading provider of secure electronic and paper payments solutions, has partnered with DIA Europe, providers of the Kappa cheque fraud prevention platform used by many leading banks, to create a new tool that is designed to strengthen the cheque industry’s protection against payment fraud. UCN Plus® – patents pending – will help to ensure that counterfeit, forged and fraudulently altered cheques are robustly and automatically trapped and rejected wherever possible.

UCN Plus® enables the variable payment data – payee name, amount, date, etc – to be encrypted and hidden within a QR code printed on the face of all cheques issued by the TALL Group on behalf of its cheque bureau customers. Once the recipient has deposited the cheque, Kappa’s profiling and matching tool alerts the issuing bank to any mismatch, and customers can review the item before committing to pay, and still remain within the new two-day clearing cycle.

This reduced clearing cycle forms part of the Image Clearing System (ICS), which was officially introduced across the UK last October. As part of ICS, cheques are now digitised at the point of deposit, and are no longer to be transported during the clearing process. The paper document has no legal value once imaged and that image transmitted into the infrastructure, so the integrity of the digital image becomes fundamental to its use as the ‘instrument’ to achieve the funds transfer.

This new system requires the use of Image Survivable Features (ISF), such as UCN Plus®, to protect against fraud. Overall payments fraud fell by 5% in 2017 compared to the previous year, however the total figure still stood at £731.8m. This is despite £2 in every £3 unauthorised fraud being stopped that year.

Commenting on the launch of the UCN Plus®, Martin Ruda, Group Managing Director at the TALL Group of Companies, said: “As an organisation committed to the safety, security and integrity of the cheque payments system, the collaboration with Kappa has enabled us to deliver a further and critical layer of fraud prevention to the UK’s corporate cheque users. The benefits of the new Image Clearing System will underpin the continuing effectiveness of the cheque as a payment tool, and the TALL Group will strive to ensure the UK payments systems stay one step ahead of the fraudster.”

The Future Cheque Clearing Model – a fraud management opportunity

As the cheque industry gets down to work in building the Future Clearing Model (FCM) in time for the 2017 implementation, some continuing debate circulates the players as to where, and how, the liability for fraud sits in the ‘new world’.

Does the liability remain where it has traditionally, with the ‘paying bank’? If the paying bank never sees the original paper cheque (which it will not in many instances), should the ‘collecting bank’ take some of the liability? The current indication is that a more balanced approach to liability will emerge and that seems to make sense. What is clear, and being recognised by all, is that the responsibility to identify and trap fraudulent items is the responsibility of all – otherwise the FCM may fail – and that the availability of automated technology to check, flag and where appropriate reject an item is critical to the management of fraud prevention in the new paradigm.

secure cheque printPerpetrated cheque fraud has been well controlled – albeit no fraud is an acceptable fraud – in the current cheque clearing environment, and Cheque & Credit Clearing Company report a year on year reduction of 21% to £9.5m in the first six months of 2015. ( www.chequeandcredit.co.uk ) However this very success is itself a potential hostage to fortune for the industry, as the one thing we can be sure is that fraudsters will target the new model, and probe any weak links in the chain. The much shortened clearing cycle, reducing from up to six days down to as few as ‘irrevocable funds next working day’ (and some institutions may well give value in near real time), is a double edged sword in this regard. A significantly shorter window in which to perpetrate a fraud challenges the fraudsters to be slicker and more precise, but equally the time available to trap the item is so much less.

Interesting validation and fraud prevention tools are emerging, both at the point of first deposit/scan – which may be at a bank, a bureau, a drop box/lock box or indeed a Corporate running Remote Deposit Capture (RDC) – and at the central infrastructure where proven profiling and account history analysis is being deployed. Collecting banks and their agents can apply the new tools to their scanning application, and bring an alert to screen that flags a suspected invalid item – whether for a missing date, invalid codeline, or a noncompliant document size, for example, and where the Ultra Violet (UV) image is being captured, some clever image analysis can identify a ‘smudge’ in the invisible UV pattern, and flag up a potentially fraudulent alteration which would otherwise go unnoticed.

There is much work to be done, and images captured by a mobile device offer other and different fraud prevention challenges that are being worked through , but the industry is embarked in the right direction, and should ultimately deliver a world class cheque clearing system with fraud rates which remain the global benchmark.

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