Every year, millions of consumers fall victim to identity theft, which according to the Federal Trade Commission is the nation's fastest-growing crime.
Based on research conducted by John H. Harland Company (NYSE: JH), 70% of consumers would be more likely to do business with a financial institution that offers protection against check fraud and identity theft.
To address this growing need, Harland announced today the release of its Validify solution for fraud prevention, which was jointly developed with Mitek Systems, the leader in image analytics. During rigorous pilot testing, the company's patent-pending technology captured up to 85% of forged and counterfeit checks. Validify is just the first in a suite of fraud prevention capabilities that Harland will be rolling out to provide financial institutions a way to combat major types of payments fraud, a common concern of their customers.
"Our pilot test results indicate users can expect to eliminate at least 85% of their check fraud losses due to forgeries and counterfeiting," said Kevin Lee , president of Harland's Services and Payment Solutions division. "Most importantly, we're not only talking about saving the industry hundreds of millions of dollars per year, but also about protecting the identity and assets of individual financial institution customers, and consumers in general."
The comprehensive solution specifically addresses the most difficult-to-catch type of check fraud: the forgery of the maker's signature. Employing advanced image processing, data encoding and encryption, digital printing and statistical validation software, Validify will enable financial institutions and merchants to validate the authenticity of the maker's signature and physical check document. The combination of an image-survivable, Check 21-compatible digitally printed security feature and sophisticated software ensures the check can be securely authenticated at any point of presentment.
Committed to partnering with industry leaders, Harland experimented with technology using various transport and imaging devices from providers such as Digital Check, IBM, NCR and UNISYS. Harland also secured the participation of several financial institutions of varying sizes who piloted the technology. Harland currently is engaged in discussions with a number of credit union clients about pilot testing. Executive Vice President and CIO Dan Butler of West Georgia National Bank said, "We are committed to helping protect the identity of our customers. Harland's technology really appealed to us because it allows us to capture the vast majority of forged or counterfeit checks before they hit our customers' accounts. We believe our customers will genuinely appreciate the added security they get by banking with us and by using Harland checks."
"We have been a partner of Harland's for many years, and we have come to appreciate their efforts and the company's innovation and forward thinking strategy," said Monica Canchola, vice president operations administration, Tri Counties Bank in Chico , California . "We believe this solution will become an important industry initiative that significantly impacts the way we do business and successfully addresses security concerns surrounding fraudulent checks and identity theft."
Harland is confident this technology will be equally appealing to merchants who, like financial institutions, lose billions of dollars each year as a result of lost, stolen or counterfeit checks. The company is presently in discussions with major retailers about entering a pilot testing phase focused on enabling them to use the technology at the point of sale.
"Over 40 billion checks are signed every year in America today. This is the first solution to enable a real-time validation of a signature anywhere a check is presented for payment," said James DeBello, chief executive officer of Mitek Systems. "Mitek is very pleased to work with Harland to introduce this capability to protect consumers against check fraud." In 2004, Harland acquired a 20 percent ownership stake in Mitek.
Harland will begin marketing and selling its Validify solution to its check clients in early 2006 and will be pursuing licensing opportunities with other providers in the check printing, presentment, processing and imaging industries.
"We are pleased to have been actively involved in the piloting phase of this solution," said Chuck Tufts, executive vice president of retail services, U.S. Bank. "As a result of our participation, we witnessed first-hand the capabilities of Validify to accurately and effectively detect a majority of the forged checks presented in the simulated test environment. This improved ability to pre-empt fraud should certainly impact financial institutions by helping to reduce annual check fraud related losses."