According to the 2004 ABA Deposit Account Fraud Survey Report, deposit loss attempts against US banks increased 33% to $4.8 billion as compared to the 2002 ABA survey results. However, even though fraudsters are attempting to take more from financial institutions (FI) in the US, the good news is that many FIs are providing front line training and deploying sophisticated tools both at the teller window and in the back office to mitigate losses, and these combative measures are working. The ABA report found that from 2002 to 2004, actual losses decreased by 3%.
Tellers play an integral role in preventing losses. Management is constantly challenged with how much work and risk assessment they want tellers to do? For example, management must decide how much time tellers spend processing transactions and making risk decisions. Currently, many FIs are investing in technology to upgrade teller systems and capture check images at the teller window, which might add a few seconds to the transaction time, but can save the financial institution significant time and costs in backroom processing. As a result, management must weigh backroom processing savings against the additional time a customer might wait.
Management must also evaluate how much time tellers spend assessing whether or not to give cash back. One of the key objectives is to quickly process transactions while balancing the risk associated with the transaction. The teller must take into account the depositor’s past activities, such as returns, length of time the account has been open and the balance of the account. FIs are looking for easy to use risk solutions that help tellers balance efficiency with risk; therefore, it’s important to consider proven solutions like Primary Payment Systems’ (PPS) Early Warning DEPOSIT CHEK reader. This powerful service delivers warnings that help the teller make decisions by indicating whether or not the account exists and what risk is associated with the deposit. This information, coupled with the depositor’s account history aids the teller in deciding whether to give cash back or place an extended hold on a deposit.
This practice can also help provide good customer/member service. For example, a current scheme involves a fraudster buying a car with a check (i.e. an official check, money order or personal / business check). The seller accepts the check as payment and deposits it into his account; however, the check is fraudulent and ultimately returned. The seller/customer is then out both the car and money. By providing tellers with access to solutions like the Early Warning DEPOSIT CHEK reader, they are able to provide information to the depositing customer quickly, which may help prevent them from becoming a victim of a fraud.
While FIs will continue to have trained risk professionals in the back room looking for suspicious patterns of fraud rings, counterfeits and kiting schemes, it’s important to recognize that tellers are the first “gate” into the bank. By deploying easy to use solutions that empower tellers to make decisions, risk and customer/member service can be balanced.