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According to the annual Association for Financial Professionals Payments and Fraud Control Survey*, 61% of businesses experienced payments fraud at least once. 87% of said businesses reported check fraud as the number one target. Organizations must continue to battle fraud on a daily basis as payment fraud results are proven to be stubbornly high. Checks continue to lead as the payment type that is most attacked even as their use has dramatically declined. These statistics have reminded us not to be fooled. As payment options evolve, fraudsters’ techniques are evolving as well. Now more than ever the need for new security models and strict controls should be top priorities for organizations across the country and around the globe.
The potential risk of payments fraud should not be underestimated by companies because it can strike at any time and in any location. Understanding processes, procedures and current technology will allow organizations to invest wisely in preventative measures. Protecting valuable corporate assets remains a high priority. Preventative payments fraud technology is especially valuable as organizations continue to defend balance sheets from fraudulent check payment activities.
Historical Check Fraud
At one point, decades before current technological advances, stores and vendors would post bad checks on the wall for all the local customers to see. It was embarrassing to the check writer and allowed other local business owners to avoid checks from that person. However, the fraud landscape changed drastically with the rise of the Internet. Global consumers do business together and many times they never meet face-to-face. Current check fraud activities come in these common forms:
- Check Kiting – This is the most common instance of check fraud. Fraudsters write checks, so they can take advantage of the time it takes the bank to reconcile the funds in the underlying account. Eventually the underlying account is replenished.
- Check Forgery – Assuming the identity of the owner of an account and using their account without the owner’s authority. Forgery can be achieved by physically stealing another person’s checks or adding words or digits to a check that is legitimately written.
- Check Abandonment – A fraudster deposits a bad check into his or her own account then withdraws the funds in cash. The bank flags the account as overdrawn but the fraudster simply abandons the account.
- Embezzlement – In the case of check kiting, funds are replenished in the delinquent account. When funds are not replenished in the underlying account it is considered embezzlement. Fraudsters “took the money and ran.”
About Certegy
Over 45 years ago, Certegy was born from organizations needing to know more about a check writer’s past. Fraud is Certegy’s number one enemy. The marketplace and merchants have come to rely on Certegy to help them accept checks from their customers with confidence. Certegy provides check authorization and payroll check cashing services for businesses that accept checks in their store, online, over the phone, and through the mail. According to the 2013 AFP Fraud and Control Survey, the typical loss from check fraud is approximately $20,300. Certegy realized the organizational need to protect corporate assets from the high level of loss, so they developed proprietary technology.
Through its state-of-the-art research and development, Certegy became the top global provider of check cashing services and check authorization methods. What sets Certegy apart from the competition is its dedication to client education. Certegy is available to clients through any times of stress and will guide clients on how to protect sensitive information in the future. The results speak for themselves, Certegy clients are ten times less likely to suffer from check fraud than organizations uninvolved with preventative check fraud measures.
Understanding Certegy Check Codes
The Certegy system implements reason codes to aid merchants during a check transaction. When any codes appear during a transaction, merchants should take extra caution when accepting the check in question. A best practice is to simply not accept any check that has a Certegy code attached to it. The following are four common codes with reasoning:
- Reason Code 1: The highest indicator of check fraud. This code is triggered when a check-writer has a negative check history or previous instances of fraud. Certegy requires more information from the check-writer when code 1 is triggered.
- Reason Code 2: The most common code often due to check-writers lacking a financial or credit history.
- Reason Code 3: The check itself has high risk factors. The check may be originating from a troubled financial institution or country with high levels of check fraud.
- Reason Code 8: Unknown. Judges check-writing frequency. If a person writes checks to the same vendor in a short period of time, this code will be triggered.
The Impact of Fraud on Personal Credit Reports
Many consumers have no idea he or she is a victim of check fraud. One of the best preventative measures consumers can take is to obtain a thorough personal credit report and analyze it for fraudulent activities. Certegy feels this is the first step for all consumers, whether business or individual, to prevent the negative financial impact of check fraud. Certegy provides a free credit report to any consumer wanting to take control of his or her ability to avoid financial ruin.
Certegy’s Complimentary Credit Report
Crooks use clever schemes to defraud millions of people every year. Stay a step ahead with an annual credit report on your personal accounts as well as business exposure. Many business owners forget that businesses are considered people in the eyes of the law. Credit reports are just as important for corporations as they are for individuals. In an effort to comply with The Fair and Accurate Credit Transactions Act (FACT) Certegy gives consumers the ability to request a free copy of his or her file from any consumer reporting agency once during any 12-month period. To request a copy of your complimentary Certegy credit report, please use the following options:
- Call toll-free at 1-866-543-6315
- Mail your request to:
Certegy Check Services, Inc.
P.O. Box 30296
Tampa, FL 33630-3296
* If you write to request your credit file, you will need to include your name, address, driver’s license number, bank routing and account number and Social Security number.
The Fair Credit Reporting Act (FCRA) is designed to protect the privacy of consumer report information — sometimes informally called “credit reports” — and to guarantee that information supplied by consumer reporting agencies (CRAs) is as accurate as possible.
Companies Using Certegy
- 7-11
- Aeropostale
- Albertson’s/Shaws
- Amazon.com
- Babies ‘R Us
- Barnes & Noble
- Bed, Bath & Beyond
- Best Buy
- Blockbuster
- Brookstone
- Cingular Wireless
- Circle K
- Circuit City
- CVS
- Dillard’s
- Eckerd’s
- Electronics Boutique
- Famous Footwear
- Food Lion
- Footaction
- Footlocker
- Game Crazy
- Game Stop
- Garden Ridge
- Goody’s
- HEB
- Helzberg Diamonds
- Holiday Gas Stations
- Home Depot
- K-Mart
- Kohl’s
- Land’s End
- Lowe’s
- Macy’s
- Marshall’s
- Netflix
- NTB
- Petsmart
- Piggly Wiggly
- Price Chopper
- Radio Shack
- Raymour & Flanigan
- Ross
- Sally’s Beauty Supply
- Sears
- Shoe Carnival
- Staples
- Target
- The Body Shop
- TJ Max
- Wal-Mart
- Walgreens
and many others. Please share your experience with us!
Helpful Consumer Tips
Your personal information is a valuable commodity. It’s not only the key to your financial identity, but also to your online identity. Knowing how to protect your information — and your identity — is a must in the 21st century. Here are some tips to doing it effectively.
- Limit Unwanted Calls & Emails – Some phone calls and emails are important, some can be annoying, and others are just plain illegal. Learn how to reduce the number of unwanted messages you get by phone and online.
- Computer Security – The internet offers access to a world of products and services, entertainment and information. At the same time, it creates opportunities for scammers, hackers, and identity thieves. Learn how to protect your computer, your information, and your online files.
- Kids’ Online Safety – The opportunities kids have to socialize online come with benefits and risks. Adults can help reduce these risks by talking to kids about making safe and responsible decisions while online.
- Protect Your Identity – Keep your important papers secure, shred documents with sensitive information before you put them in the trash, and limit the personal information you carry with you. Find additional tips to reduce your risk of identity theft, including how and when to order your free credit report.
- Repairing Identity Theft – If you suspect someone has stolen your identity, acting quickly to limit the damage is the key. Take a deep breath and then place a fraud alert on your credit file, order your credit reports, and call the authorities to report the crime.
Importance of Preventative Check Fraud Measures
Stop fraudulent check activity before it begins. Certegy delivers ongoing check fraud protection, without causing disruption to a merchant’s business. Certegy’s revolutionary technology will alert businesses to customers with a track record of writing bad checks. Before accepting payment, always turn to Certegy’s extensive database of consumer check writing histories. Certegy will be your partner through times of payment fraud and remove common stressful tasks. The earlier a business can be warned of potential check fraud, the sooner it can be stopped. With effective risk tools in place, processors can avoid trickle-down costs due to excessive check and payment losses to their customers. A merchant that is made aware of a high-risk item may decide to promote an alternate, lower-risk payment method for a particular transaction. Extending fraud prevention in this manner helps to strengthen relations between the merchant and consumer as well as the processor and merchant. Certegy is dedicated to helping consumers and businesses combat the threat of fraudulent activity.
Frequently Asked Questions
Q) As a business owner, what types of customer information should be secured?
A) For many companies, collecting sensitive consumer and employee information is an essential part of doing business. It’s your legal responsibility to take steps towards properly securing or disposing of it. If you report information about consumers to a CRA — like a credit bureau, tenant screening company, check verification service, or a medical information service — you have legal obligations under the FCRA’s Furnisher Rule. Your responsibilities include:
- Furnishing information that is accurate and complete.
- Investigating consumer disputes about the accuracy of information you provide.
When you are finished using consumer information, you must securely dispose of the confidential information. That can include burning, pulverizing, or shredding paper documents, and disposing of electronic information so that it can’t be read or reconstructed.
Q) Why do I want a copy of my credit report?
A) Your credit report has information that affects whether you can get a loan — and how much you will have to pay to borrow money. You want a copy of your credit report to:
- Make sure the information is accurate, complete, and up-to-date before you apply for a loan towards a major purchase like a house or car.
- Credit reports help guard against identity theft. That’s when someone uses your personal information — like your name, Social Security number, or credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.
Q) I am a victim of check fraud, now what?
A) An initial fraud alert can make it harder for an identity thief to open more accounts in your name. When you have an alert on your report, a business must verify your identity before it issues credit, so it may try to contact you. The initial alert stays on your report for at least 90 days. You can renew it after 90 days. It allows you to order one free copy of your credit report from each of the three credit reporting companies. Be sure the credit reporting companies have your current contact information so they can get in touch with you.
Now that you’ve placed an initial fraud alert, you’re entitled to a free credit report from each of the three credit reporting companies. The credit reporting company that you call will explain your rights and how you can get a free copy of your credit report. Order the report and ask the company to show only the last four digits of your Social Security number on your report. If you know which of your accounts have been tampered with, contact the related businesses. Talk to someone in the fraud department, and follow it up in writing. Send your letters by certified mail; ask for a return receipt. This creates a record of your communications.
An Identity Theft Report will help you deal with credit reporting companies, debt collectors, and businesses that gave the identity thief credit or opened new accounts in your name. You can use the report to:
- Get fraudulent information removed from your credit report
- Stop a company from collecting debts that result from identity theft, or from selling the debt to another company for collection
- Place an extended fraud alert on your credit report
- Get information from companies about the accounts that identity thief opened or misused
Conclusion
It has been years since the end of the recession. Those years have seen steady but with slow economic growth and stubbornly high unemployment. Business conditions continue to be plagued with uncertainty. The vulnerability of all payment methods—especially checks—to fraud from external and internal sources demands a high range of fraud-fighting tools and the vigilance of those financial and treasury professionals responsible for protecting the assets of their organizations. These efforts appear to show continued signs of success through the use of preventative measures: The percentage of organizations subject to attempted and/or actual payments fraud decreased for a third straight year. Certegy understands how easily fraud infiltrates common conveniences such as online banking transactions. Allow Certegy to protect your organization’s financial assets and deliver optimal payment protection when your organization needs it most – before it happens.