How treacherous is the banking and financial sector? In 2022, approximately $4 billion was stolen due to fraud. A further breakdown of the medium of fraud used to steal from unsuspecting businesses and individuals reveal that check fraud, money order fraud, and transfer fraud accounted for $2 billion of the calculated losses. How did these losses occur? Shark Week gives us the chance to explore the hidden dangers in the banking and financial industry, how they are exploited, and more importantly, how to mitigate them.
Today’s focus will be a crash course on check-related fraud. The hidden dangers lurking in the murky waters of the banking and financial sector that enable check fraud include outdated firmware, outdated printers, the use of preprinted stock, unscrupulous individuals, and the use of non-MICR toners.
MICR (Magnetic Ink Character Recognition) is the technology that enables the secure processing of checks, a fundamental financial instrument used by businesses worldwide. MICR toners are special ink used to print characters on checks, like routing and account numbers, so machines can easily read and process checks with less to no margin for error.Check out these resources for an extensive discussion on MICR technology.
There is no such thing as a “non-sensitive document” in the banking and finance sector. From the checks issued from convenience stores to the stock certificates, tellers, or money orders issued by bank staff, financial documents are loaded with personal information and details that can be exploited by fraudsters. So, imagine the hidden dangers that lurk when financial institutions use the generic toners everyone uses to print checks. When generic or standard toners are used for check printing, a manual processing operation is used to clear the issued checks. The manual process of reading checks or issuing payments involves the teller employing the eye scanning test to check for defects or using a blue light counterfeit detection tool to scan the document. These methods are not failproof and fraudsters take advantage of these hidden dangers to steal. It is important to note that not all financial institutions utilize optical technology to scan checks. Hence businesses that use non-MICR toners to print documents create challenges for these institutions because the printed check will not meet the magnetic requirement associated with their reading tools. Hence, manual processing techniques will be applied. The application of manual processing creates hidden loopholes that can be exploited. Lastly, the Federal Reserve and all banks require that businesses and financial institutions print checks using MICR toner. This is because the use of non-MICR toners for printing checks creates multiple challenges for institutions that make payments. To make up for these challenges, financial institutions either reject the checks or charge extra for their processing efforts.
TROY provides MICR solutions that eliminate the hidden dangers that swim in the shark-infested waters of unsecured check printing processes. TROY MICR printers and MICR Toner Secure function together to ensure the printed lines on your checks are readable by optical and magnetic readers. Using both MICR solutions creates a fraud-resistant, anti-tamper process that keeps the sharks away. Although it is technically possible to use MICR toners to print checks on standard printers, this configuration still creates hidden dangers that can be exploited. For example, the printed check may come out with MICR lines that are unreadable thus defeating the purpose of using an MICR toner. It is also important to note that the American National Standards Institution (ANSI) strictly recommends the use of MICR printers and MICR toners to print checks for a more secure process. Companies that adopt TROY MICR solutions add extra layers of protection to eliminate the possibility of fraudsters manipulating generic toners on checks, washing checks, or creating fraudulent checks. TROY MICR printers are turnkey solutions that are designed with security by default features such as:
To help you protect your financial institution from check fraud, a series of blog posts and resources will be shared throughout the week on our website. Here, you will learn about the different MICR solutions we offer to manage your low-volume or large-volume check printing requirements. You can also take advantage of our partnership programs or round-the-clock technical support system to speak with a TROY expert today.