The Security Headache Behind BIN / IBAN Sponsorships

Published on June 1, 2023 by Sam Holland
Check fraud, where fraudsters interfere with check payments, runs rampant in spite of the increase in digital payments. In fact, on February 27, 2023, FinCEN issued a report warning financial institutions of the rise in mail theft-related check fraud.
According to the FTC via Statista, 2022 saw the loss of $178 million due to check fraud – ranking it even higher than payment app and payment service-based fraud at $163m.
While it appears that checks are here to stay, so are the security concerns that come with them. Thankfully, their safer equivalent – high-security checks – are a versatile and evolving technology that makes check transactions far safer. Let’s take a look at what they are and how they can help the businesses that use them.
High-security checks (“high-security cheques” in the UK) are paper checks that have extra layers of security printed on them, such as official watermarks that cannot be counterfeited. The chief purpose of high-security checks is to avoid fraud, such as counterfeiting.
There are many security features that can be used to create high-security checks. Specialist printers carry out the implementation of those security features.
Regardless of the number and types of security features chosen by an organization wishing to utilize high-security checks, their purposes are as follows: to deter fraudsters, reduce fraud, and protect the financial interests of the check payer and payee. Of course, the key to financial security is in carrying out the right identity checks through fraud prevention tools. You can enjoy a flavor of how SEON can help, for example, by entering an email address, phone number, or IP address below.
High-security checks have a variety of features. These are all essentially specialized printouts carefully applied to what would otherwise be just a regular check.
While regular checks have their own security systems in place, such as ID numbers, forgery-deterring designs, and signatures, high-security checks are safer because of the extra, more specialized layers of security they contain.
Here are some key examples of such features, all of which are developed through a process called security printing:
Alongside the above, there are many other types of security printing in high-security checks. The meticulousness of each one depends on the preferences of the organization printing the checks and the level of security required.
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Counterfeiting and other fraudulent attacks, such as new account fraud, occur more frequently when organizations only use regular checks. You need to use high-security checks if you want to minimize fincrime and bolster your business’s reputation, especially if you regularly rely on check transactions.
While the digital age has rendered check transactions less common than they used to be, the fact remains that checks, and therefore check fraud, are still common in certain sectors, particularly sensitive ones such as insurance, taxation, and banking.
According to FinCEN, the United States Postal Inspection Service (USPIS) received 299,020 complaints in 2021 about stolen mail, which is a core way that fraudsters intercept and process fraudulent checks. The physical measures of high-security checks, such as tamper-resistant packaging, are vital to combating intrusions such as these.
On top of this, those industries that continue to rely on checks utilize them regularly because the presence of a physical paper trail means that transactions cannot be interfered with digitally, such as through hacking and phishing emails.
Checks can even be handed over in person from the payer to the payee, meaning they offer both accountability and the peace of mind of a physical exchange, as opposed to an online transaction that may be digitally intercepted by fraudsters.
Nevertheless, checks themselves are still highly vulnerable to being tampered with, so the tamper-resistance and anti-counterfeiting features of high-security checks are what make them all the more secure than their traditional counterparts. Put simply, because traditional checks are still worth using, high-security checks are, now more than ever, especially worth the paper they’re written on!
Those businesses that need to use high-security checks but don’t can face inconveniences at best, and fraud attacks and compliance failures at worst.
Some checks can be rejected if they are not subject to high-security features, so businesses that neglect to use such features will be lucky if they only encounter transactional delays.
Here’s a closer look at the potential consequences of avoiding high-security checks:
While not every business needs to use high-security checks, they can still benefit from knowing and acting on the consequences of not using them. After all, digital transactions have their own vulnerabilities, so the current rise in AI fraud, particularly deepfakes, may lead to an increase in the need for in-person check transactions.
In such a case, avoiding high-security checks could prove a particularly risky action for organizations in the future.
Using high-security checks leads to advantages in both your and your customers’ security, finances, and reputation. Such checks lead to safer transactions, bolstering the financial and reputational stability of both the payers and the payees involved in your organization’s income.
Ultimately, high-security checks protect people’s money and data. You are less likely to be subjected to a financial breach and a data breach if you use copy protection and other protective measures when paying and receiving checks.
Meanwhile, having such measures in place shows you care about the privacy, safety, and financial security of your staff and your customers alike, which can boost the image people have of your business.
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You will especially benefit from high-security checks when you stack them with SEON’s fraud prevention system. High-security checks are strong security tools, but you need dedicated software if you want to act as a gatekeeper against fraudsters, not just thwart and deter them at the transactional level.
In other words, for all their benefits, no organization should solely rely on high-security checks. They are, after all, equipped to combat fraudulent payments – but not so much the people making them.
Let’s take a closer look at how SEON can help enhance the benefits of high-security checks. Let’s say you own a business that has received a high-security check from a customer whose details you’re unfamiliar with. Here’s what you can do with SEON’s software:
To learn more, check out the below animation, which shows these capabilities and more in action.
All in all, high-security checks are certainly worthwhile for any business that uses paper-based transactions. However, no kind of check is perfect, and SEON’s fraud prevention system can add plenty more layers of security to what is already a useful approach to paper transactions.
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Sam is SEON's Fraud Content Writer. He has a background in writing and editing content for a range of tech and engineering publications which has led him to gain a strong interest in cyber security. At SEON, Sam enjoys writing about cutting-edge solutions to fraud attempts and cyber attacks, such as transaction monitoring and machine learning.
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