Part 1 of this article addressed why tellers are still critical employees at the credit union. Even though the volume of transactions performed at the teller line has dropped 40% in the last twenty years and credit unions have witnessed greater consumer preference for self-service banking technologies, tellers are still the front line of the institution. The teller is the first person to interact with members in opening accounts, in addressing member service issues, and in identifying cross-selling opportunities with members. However, the teller can also be a member’s key ally in identifying and preventing check fraud.
Fraudsters Are Finding New Ways To Use Checks For Fraud.
Members are frequently the target of payments fraud ranging from secret shopper scams to foreign lotteries to Craigslist sales and international wire fraud. There are also growing incidents of counterfeit cashier’s checks as well as high-quality government check forgeries. These schemes are now being combined with sophisticated identify theft and phishing scams as fraudsters find new ways to defraud consumers using paper checks. Many of these schemes are being facilitated by the drop in price of high-quality scanners and printers and the susceptibility of people who are tempted by financial difficulties to buy-in to these schemes.
Many people lack the proper education or financial sophistication that would alert them to the fact that these are actually scams, and these people are vulnerable to fraud. The 2011 American Bankers Association Deposit Account Fraud Report shows that one-third of check losses are caused by counterfeit checks and another third are caused by losses on returned items.
These are the types of loss that tellers can use front-line teller capture solutions to identify and prevent.
Download Bluepoint’s white paper Reducing Check Losses
$5 Billion A Year And Counting
Members not the institution are the biggest victims of check scams. Members incur significant losses from overdrafts, fees, negative account balances, uncollectible payments for goods and services, and damaged credit from charge-offs. The impact of these costs to credit union members varies by institution, but the costs industry-wide are significant.
In 2007, the Secret Service reported that the annual cost of check fraud in the U.S. is $5 billion. The chief of the agency's financial crimes division called check fraud "the number one way criminals today are attacking our financial systems." Credit unions and other financial institutions are in a critical position to be able to identify and stop check fraud before their members incur losses.
Check 21 Can Reduce Losses From Fraud
Since 90% of teller transactions involve check deposits, tellers can be key players in protecting both institutions and their members from these losses. Tellers are trained to identify forgeries based on the built-in security features of a check. They can also use teller capture to validate deposits in real time and identify checks written on accounts with a history of counterfeits, low or negative balance, or high incidence of returned items, as well as accounts that have been recently opened or are closed.
The key to identifying potential losses before they hit your member is by scanning the check immediately at the teller line and notifying the member that their deposit could be fraudulent or has a high likelihood of return. Otherwise, the member does not even become aware that the check they deposited will be uncollectible until days later, making recovery of their funds exponentially more difficult. Advising members at the time they make the deposit allows them decide whether they should proceed with the deposit, try to collect payment directly from the financial institution the check is drawn on, or ask the payor to use a different form of payment.
Giving your tellers the training and tools to prevent losses will allow them to provide more valuable service to members and build stronger ties to the credit union.
For more ways that tellers can add value to your credit union, click here to watch Bluepoint’s free on-demand webinar Keys to Improving Teller Efficiency
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