Sunday, March 07, 1999
Thumbprints help slash bank fraud losses
But criminals quick learners
BY JEFF McKINNEY
The Cincinnati Enquirer
When it comes to check fraud, Ralph Unger could tell thousands of tales about how suspects rob Tristate banks without ever using a gun.
Imagine two guys forming a phony company and duplicating legitimate payroll checks and getting away with a cool $21,000.
Or creative crooks who use Vaseline or Super Glue to smudge their fingerprints on bogus $500 checks so banks can't identify them later.
Mr. Unger, a detective in the Cincinnati Police Department's criminal fraud unit for nine years, said his office handles about 600 fraud cases a year, including 400 involving banks or retailers.
But a pilot program that helps banks fight check fraud is helping Mr. Unger catch suspects and has reduced his case load for such crimes by 50 percent.
Started two years ago by the Ohio Bankers Association and the Ohio Attorney General's Office along with four Cincinnati banks, the program has spread to a total of 12 Tristate banks and 57 in Ohio.
Under the program, non-customers of a bank who want to cash a check must press their thumb to a fingerprinting device, along with providing standard personal identification. If the check turns out to be fraudulent, the thumbprints are used by law enforcement agencies to identify the person who cashed the check.
“We've been able to catch suspects easier because we can quickly match the fingerprints with ones in our system,” Mr. Unger said.
Although no figures are available, Cincinnati banks that have been thumbprinting non-customers say the effort has been successful.
Jim Rechel, director of bank protection at Fifth Third Bancorp, said the program reduced check fraud at Cincinnati's largest banking company by 50 percent from March 1997 through March 1998.
But he said the rate of reduction is slowing down as crooks have discovered ways to get around thumbprinting.
For example, check-fraud experts say, suspects try to beat the thumbprint process by using people who have never been fingerprinted to pass bad checks, reducing the risk of a print match.
Mr. Rechel said 80 percent of Fifth Third's check-fraud cases involve individuals or groups who use counterfeit or duplicate business checks and try to cash them as payroll checks.
Most banks say they experience bigger problems with business checks because suspects figure they can write them for greater amounts and attempt to pass more of them than personal checks.
“It's become a significant enough problem for us that we're spending more time on it internally,” Mr. Rechel said.
He said Fifth Third will be among 10 banks nationwide that will meet in Cincinnati next month to establish check-fraud prevention strategies go beyond the thumbprint program.
Dick Baker, a vice presi dent at PNC Bank, said the program has reduced the amount of check fraud losses and the number of incidents by 70 percent the past year.
“We continue to look at all types of ways to deter fraud,” Mr. Baker said. “But this has played an important part as a means of helping us control expenses.”
The program is catching on at banks of all sizes, said Nancy Fields, who heads the OBA's thumbprint effort.
There are big stakes with check fraud.
It cost the nation's banks $512 million in actual losses in 1997, up from $487 million in 1995, according to a Federal Reserve study.
When the thumbprinting effort began, many consumers found it intrusive to have to leave their thumbprint on checks, particularly in cases where they also were charged for completing such transactions because they don't have bank accounts.
Ed Mierzwinski, a consumer advocate at the Ohio Public Interest Research Group's Washington, D.C. office, said his group still adamantly opposes such things as banks taking consumers' thumbprints.
He said the thumbprinting invades individuals' privacy, is demeaning to low-income and working-class consumers and allows banks to possibly sell data they collect to generate new revenue.
But banks, unexcited about cashing checks for non-customers anyhow and always looking for ways to cut losses, say they will continue the practice because it works.
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