Major consumer check printers in the United States and Canada are for the first time coordinating efforts to stem the rising tide of check fraud.
Last summer, the Financial Stationers Association -- a Washington, D.C.-based trade association representing North America's largest check printers -- formed a task force to establish security guidelines for retail check stock.
Participating check printers included John H. Harland Co., Deluxe Corp., Clarke American, Liberty Check Printers Inc., Custom Cheques of Canada, and Davis and Henderson Ltd.
While check printers have for years taken measures to fight certain types of check fraud, especially for corporate checks, this is the first time they are addressing a more recent high-tech threat to the retail payment system.
"In the past, people used mostly eradicators to change amounts on [retail] checks," said Donald K. Voshall, senior vice president for Atlanta-based Harland Co., who headed up the task force. "Now, with the proliferation of laser printing technology and desktop publishing, people can easily duplicate checks."
According to the American Bankers Association, these technologies have been major contributing factors to the surge in check fraud that occurred among the nation's commercial banks between 1991 and 1993. An ABA survey conducted this year -- with 309 responses from banks of all sizes -- revealed 1.3 million cases of check fraud, an increase of 43% over two years earlier. This cost banks an estimated $815 million, the association reports.
The guidelines developed by the task force are outlined in "Guideline to Enhanced Check Security," published by the FSA.
The security features promise to thwart criminals, and can help anyone accepting a check verify its authenticity.
Although the guidelines are voluntary, all of the major check printers have agreed to incorporate them into their retail check stock. The two largest firms, Harland and St. Paul-based Deluxe, have announced that they will have security features in their consumer checks by the first of the year.
The features will not require any special inks or retooling, so the cost, if any, passed on to customers should be minimal, FSA officials said.
One of the features is microprinting on the fronts and backs of checks. Microprinting uses tiny words that appear, at first glance, to be a solid line. The words can, however, be read with magnification. Laser printers and photocopy machines cannot reproduce microprinting, officials claim.
According to the guidelines, microprinting can be used on the signature line, on the check border on the front of checks, or on the line that separates endorsement sections on the back of a check. A legible "MP" is placed next to the microprinted line to alert a person receiving a check that microprinting has been used.
Another measure is a security screen, a design that can be printed lightly on the back of a check. The screen is visible to the naked eye but is difficult to duplicate with color copiers or laser printers.
To alert a payee that the check contains FSA-recommended security features, a standard icon of a padlock, positioned to the right of the word "dollars" on the front of the check can be used.
In addition, a warning box that lists the security features included on the check can be printed on the bottom portion of the back of the check, with the padlock icon. Anyone accepting a check can read the warning box and examine the check to confirm that the security features listed are on the check.
The guidelines recommend that check printers use at least two security features along with the padlock icon and the warning box.
The task force hopes that these features will become widely recognized by parties accepting checks, and that they will serve as a deterrent to those contemplating check fraud.
"The padlock and warning box probably won't deter professional counterfeiters," said Mr. Voshall, "but they may stop the casual ones."
Major check printers already use a variety of security features. Special chemical reactive paper, a standard in the industry, turns brown when a person uses an eradicator to alter handwritten information on a check.
The use of detail borders and intricate designs that are hard to duplicate are also common.
FSA president Charles M. Osborne said that the association plans to review and revise guidelines annually to deter those who use technology to commit check fraud.
