Early Warning Beefs Up FI Counterfeit Notification

Early Warning, a fraud prevention and risk management company, announced yesterday (Aug. 3) the launch of a Counterfeit Notification enhancement to its Batch Deposit Chek Service.

The company’s Deposit Chek Service is designed to alert financial institutions when an item is likely to be counterfeit, which Early Warning said protects consumers and helps to reduce bank losses.

“Despite misconceptions of check usage declining, counterfeit fraud remains a serious threat to financial institutions and their customers,” said David Barnhardt, vice president of product management, Payments, Early Warning, in a company statement. “Research continues to show the impact of fraud losses from counterfeit checks. The American Banker’s Association found counterfeit losses ranked first in top fraud losses across all check fraud categories from Q2 2012 through 2013.

“By introducing this Counterfeit Notification element to our solution, we are supporting banks’ efforts to mitigate fraud and instill both customer satisfaction and trust in their institutions.”

Early Warning’s service assists banks with making funds availability decisions or expediting preventative actions when it comes to deposited items based on the status of the payer’s account, if an account is returning transactions and if a stop-payment was placed on an item.

The company’s boost to its fraud prevention service may be coming at a perfect time.

A security expert at the Federal Reserve Bank of Atlanta recently noted the upcoming transition to EMV chip payment cards may result in an increase of two other financial crimes: those involving checks and bank account applications.

“Well before the EMV card liability shift occurs in the United States on Oct. 1, 2015, a number of financial institutions have reported a marked increase in counterfeit checks and duplicate-item fraud, usually by way of the mobile deposit capture service,” wrote David Lott, a payments risk expert in the Atlanta Fed’s Retail Payments Risk Forum.

“In many cases, the fraud takes place on accounts that have been open for more than six months, long enough to allow the criminal to have established an apparent pattern of ‘normalcy,’ although there are reports of newly opened accounts being used as well,” Lott added.

While the EMV migration will shift fraud away from payment cards (as well as mobile-payments approaches), it still leaves both banks and merchants in harm’s way, due to the creation of fraudulent accounts and the use of bad checks or phony credit applications.

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