By: Deborah Johnson Wood
ProofSpace, a West Michigan software development firm specializing in data integrity, is ready to launch a pilot program of their ProofMark technology that identifies fraudulent checks—technology that could save consumers and banks billions of dollars.
Last month, the National Consumer's League released its 2007 top ten scam lists for Internet frauds and telemarketing frauds and, for the first time, check fraud was number one on both lists.
"There's no way to identify a fraudulent check," says Paul Doyle, ProofSpace owner. "Scammers create real-looking false checks that have real account numbers, bank routing numbers, and an authorized signature."
This information comes from legitimate checks intercepted by scammers who create sophisticated scenarios to convince unwary consumers to deposit the checks into their personal accounts and then wire most of the deposit amount to the scammers. The consumer thinks they get to keep some of the money as payment—not knowing they've just wired away their own money.
By the time the bank determines the check is false, it's too late and the bank is often left holding the bag—to the tune of $12 to $20 billion a year, according to Doyle.
"Our technology puts a tamper indicator on the check when the account holder issues it—a proofmark generated for every check," Doyle says.
ProofSpace provides an electronic verification service that identifies the tamper indicator and verifies the check is genuine.
"We're working with X9, the standards setting organization for financial institutions, to let financial institutions know the technology is available, how they can take advantage of it, and how to build it into their systems," Doyle says.
Testing is in the works now. Doyle expects the technology to be in banks by the third quarter of this year.
Source: Paul Doyle, ProofSpace
Deborah Johnson Wood is development news editor for Rapid Growth Media. She can be contacted at [email protected].
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