Many reports by Banker
trade groups have written about check fraud over the years. Check fraud is
blight to the banking system and a threat to corporations. Specifically, 2011
check fraud statistics show how vulnerable Property Management Companies are to
check forgers. With this wide security hole, it is no wonder that check forgers
continue their criminal activities.
“Despite law
enforcement’s very necessary focus on combating serious and organized financial
crime, including terrorist-related activities that remain an ongoing threat –
one of the simplest and most prevalent ways to commit a financial crime, to
steal money, is to commit some form of check fraud.” –James H. Freis, Jr.,
Director, Financial Crimes Enforcement Network (FinCEN), US Department of
the Treasury, October 2, 2010.
Motivating Factors
Why is there so much
check fraud? Is it the economy we are in now…..or, is it just too easy to pull
off check fraud with a laser printer and software? Every time forgers are
caught and punished, more forgers enter the scene. Many check forgery
rings are well managed, often from overseas. The masterminds of these groups
are well insulated from prosecution. Those at risk of getting caught are
usually the “runners” entering banks to cash forged checks. In many cases,
these groups try and get “ordinary” people involved in their schemes to even
further isolate themselves from discovery and prosecution.
The Findings
In 2011 the average
Property Management Accounting Software A/P check had 4.51 security features
which on average grades a C-.The range of these security features is between
zero all the way up to 22 different security features on some checks received.
Those checks which have four or less security features are pretty much
defenseless against today’s intelligent and cunning forger.
Check Security By Accounting Software
package used:
Average # of Average
Software Security
Features LaserCheckGRADER.com grade
MRI 6.4 C+
QuickBooks 6.1 C
Skyline Software 3.5 D+
AMSI Software 3.4 D+
Yardi Systems 3.5 C-
The total checks received and graded at LaserCheckGRADER.com have a combined average C- grade.
As you see in the chart above, MRI Software and QuickBooks checks are fairly
respectable with an average of 6 security features on their checks but only
grade a C or C+. Unfortunately, Skyline Software, AMSI Software and Yardi Systems checks all are far below average with
only 3.5 security features per check on average and grade rather poorly between
D+ and C- at LaserCheckGRADER.com.
All three of these accounting software packages with low grades have numerous
vendor choices when purchasing checks. This shows that the users are not aware
of the lack of security on their check stock. It is also likely that many users
have not ever really even thought about the security of their checks.
Which check security feature is used the
most?
The following list shows security features that Property Management Accounting
Software users are implementing against check fraud.
By Security Feature:
Micro print 73%
Chemical paper 62%
Security Screen 60%
Void Pantograph 52%
Warning band 47%
Watermark 29%
Ultraviolet Fibers 29%
Laid Lines 24%
Thermo ink 22%
Prismatic 14%
Toner grip 9%
Eraser Protection 8%
High Resolution Border 4%
In Summary…..The best Check Security is
Not Often Used!
This study has identified that some of the best check security features are
seldom used. Property Management Accounting Software users have significant
gaps with these key security features.
What really stands out on this chart is that Toner Grip is only used on 9% of
the checks received. Toner Grip is such an important security feature to use
against forgers. It is a special coating that allows laser toner to adhere to
the paper more effectively. When counterfeiters try to lift off type with tape
or a dental pick, the check paper comes with it, destroying the check and any
hope of changing information on it. Toner Grip does raise production costs for
the check vendor but it is a key deterrent that should be used much more often
regardless of cost. Using this feature on a more widespread basis would
severely limit the instances of check fraud.
Another excellent security feature with limited use is Thermochromatic Ink. This is used on only 22% of the checks received. This ink
is sensitive to heat and disappears when rubbing warms the surface of the
check. Thermochromatic Ink cannot be duplicated on a copy machine. The image can be
captured but it will not be sensitive to the heat generated by rubbing the
surface. In other words, a duplicated image loses the thermochromatic properties of the ink.
Void Pantographs were present on 52% of the checks received. This is a better
showing, but only half of the checks received are using this important security
feature. Many more companies could benefit from protection against their checks
being scanned or photocopied.
A High Resolution Border was used on just 4% of checks received. Holograms and
Foil Bars were used on a single check, well below 1%. Prismatic Printing was
used on just 14% of checks received. Use of these features would significantly
increase security on Property Management laser checks.
How Do Your A/P Checks Compare to this
Industry Peer Group?
Your final step is to compare your company checks to your peers. Here are four
easy steps for comparing various check and accounting software vendors based on
their security features.
How to Compare Check Security FeaturesFrom Several Check Vendors
1) Perform a Google search for your Accounting Software name. Choose 3 to 5
vendors that provide checks for your accounting software in an appropriate
check style.
2) Print out a list of check security features offered by each vendor.
3) Grade each vendor’s level of check security at LaserCheckGRADER.com to get a letter grade of A, B, C or D.
4) Once you have a grade for each vendor, then you can compare prices and
delivery time to make a selection that is best for your company.
It really is that easy! Do this at least once every two years to stay on top of
check fraud trends.
Recap
Using simple internet searches for your accounting software checks, you can
often double the amount of check security without any additional cost. Once you
improve your check security level, you will not need to do a threat assessment
for a couple of years. This is one of the best investments of time you can make
in your business this year.
This report exposes certain software packages which tend to offer less security
features on their checks. This shows that the problem is not confined to a
single vendor, and that we should evaluate our check software much more
carefully. So it appears that there are numerous vendors which offer a low
number of security features.
As a result, the best security features to protect you from check forgers are
not being used nearly enough. This is true across the board.
Most companies need to focus on some basic internet research to secure their
bank accounts and close the check fraud hole in their system. Starting today,
it is easy to manage your check fraud risk level with some basic proactive
measures.
This survey was conducted from June 1, 2011 to Dec 31, 2011. Results were compiled
from actual A/P checks received from various property management companies.
Every effort was made to determine which accounting software package generated
the checks received. If an accounting package could not be determined, then the
check was not included in the overall results and statistics. Checks that could
be traced to a particular software package were used in the overall results in
addition to the results for that specific software.
Property Management Accounting Software users need to be prudent and search for
the highest level of check security features that their budget will allow. Shop
around and do not rely on the original check source that was given at the time
of your software installation. From the results above, it appears that a fraud
threat assessment has never been performed at most companies. This is
imperative in order to review their check quality. With an annual or
semi-annual review of check security, many Property Management Companies would
quickly discover that their checks are severely lacking in fraud protection and
seek more secure options.
