Bunn developed a security evaluation sheet to help customers rate various security features, determine the safety of their current documents and build more secure documents. The evaluation sheet rates 27 features on a scale of three (least effective) to nine (most effective). It includes such features as true watermarks, thermochromic ink, bleed-through ink and void pantographs. Some of the highest-rated features include Intaglio printing (a process in which the image or design is cut or etched into the surface of the printing plate), raised-ink security printing and stereograms.
Bunn is a realist, however, and recognizes that some of the best features are cost-prohibitive for certain customers and applications. He helps clients select a combination of features that best fits their needs. Typically, Bunn will encourage a customer ordering checks to start with paper that includes a true watermark. Then, he likes to add microprinting on the check's face (though not necessarily on the signature line) and a lathe work border. Next, Bunn suggests a custom pantograph, such as the company's logo. In addition, he offers advice on inks: The background and text should never be printed in the same color, and ink coverage should vary, with a mix of heavy solids and screens.
These steps don't ensure security, but they deter fraud. "I want to force counterfeiters to go to a company across the street and say, 'This check is easier to forge,'" Bunn says. His evaluation system has helped corporate accounts, banks and retailers secure a variety of documents. For instance, he supplied Sheraton® Hotels and Resorts with 31ˇ2 x 6-inch certificates used for bartering.
The hotel gave the certificates--available in $25, $50 and $100 denominations--to barter partners such as radio stations, with whom it traded hotel services for advertising air time. In addition to standard security features, the certificates were printed on 100-percent rag paper with planchettes (small tissue dots resembling confetti that are embedded in the paper). The certificates were intaglio printed. When the paper is pressed against the plate, the ink held in the wells is transferred to the paper to print the image.
Striking a Chord
Debunked fraud schemes make front-page news, industry publications routinely cover anti-counterfeiting technology and financial institutions warn consumers about identity theft. Yet total worldwide losses from forgery, counterfeiting and retail theft were estimated to grow to $450 billion in 2000, according to I.T. Strategies Inc., a Boston-based research and consulting firm specializing in digital printing.
Check fraud remains one of the most common white-collar criminal activities. Check fraud losses totaled $679 million in 1999, up an astounding 32.6 percent from 1997, according to a survey by the American Bankers Association (ABA). And among check fraud, forgery accounts for more than a third of the cases. So despite the media attention about fraud, clients continue to need distributors' expertise about security documents to thwart counterfeiters and con artists.
Each year, fraud methods become increasingly sophisticated. As desktop publishing equipment becomes easier to use and high-end printers become more affordable, more amateur con artists are turning pro. Color copiers, scanners, laser printers and personal computers are used routinely by criminals to swindle unsuspecting victims.
Checks aren't the only documents targeted by criminals. All types of documents, including identification documents and items with monetary value, are at risk for fraud. These include coupons, gift certificates, diplomas, event passes, immigrations papers, money orders, food stamps, promissory notes and more. In addition, packaging has become a target for the criminal element. With more goods being produced worldwide and more items being purchased via the internet and shipped to consumers, the threat of package substitution and tampering has increased. Adding a mix of security features, including holograms and tamper-evident packing tape, to packages helps reduce the risk.
Singing the Blues
Perhaps one of the most difficult facets of marketing security documents is that it requires more than understanding and selling the security features themselves. Security features won't prevent criminals from committing fraud if those who validate the documents--bank tellers, retail clerks, event guards and so on--don't know what to look for. Educating customers about security features is critical to reducing fraud.
Distributors should determine how and when customers distribute their documents, where the documents are stored, and where the points of acceptance are located. Distributors also should help customers institute precautionary measures, such as positive pay systems for their checks. With positive pay, companies provide their banks with daily lists of checks they issue. If the banks receive checks not on the list, they won't cash them. According to a study by the ABA, financial institutions rank positive pay as one of the most effective fraud prevention methods.
Thanks to Interform Solutions, Bridgeville, Pa., for assistance.
* Combine security features.
"Anybody that really needs security needs layering," says Richard B. Bunn, president of distributorship Security Printing Solutions, Medfield, Mass. More than 90 percent of his business consists of security documents, almost all of which include layers of features. He sold the now-defunct clothing retailer Hit or Miss a gift certificate layered with standard and high-end features. Among the features were thermochromic ink on the back and two color foils that overlapped and were embossed on the front.
* Offer more than checks.
While negotiable documents such as checks are ideal applications for security features, numerous non-negotiable documents also need protection from fraud. These include prescription pads, school transcripts, and licenses for automobiles, boats and other vehicles.
* Find a trusted manufacturing partner.
"If you're truly interested in protecting your customers from counterfeiters--and there are good ones out there--then you need to work with somebody you trust," Bunn says. He looks for vendors that offer guaranteed numbers on checks and have secure printing and storage facilities.
* Know the code.
You and your clients should understand "ordinary care." This phrase was introduced more than a decade ago when Articles 3 and 4 of the Uniform Commercial Code were revised. Before the revision, banks often were held responsible for losses in check fraud cases, even if the customer also was negligent. Now both parties share liability for fraudulent checks. Revised Articles 3 and 4 have been adopted by most states, but interpretation of terms can vary. Some people have interpreted the revision to cover everything from incorporating security features to storing checks properly for safekeeping.
* Teach clients to teach their banks.
According to the American Bankers Association, one of the most common fraud prevention practices at banks of all sizes is employee training. Distributors can help customers train their banks to look for security features and recognize fraudulent documents. One simple idea is to provide each client a letter it can send to its financial institution. The letter should describe the security features on the company's checks and explain how tellers can verify them.
