Thumbprint Signature Program

It is estimated that commercial banks lose more than $800 million a year to check fraud. With 63 billion checks written each year, losses attributable to fraud represent big money. Are you interested in a program that could reduce your check fraud losses by as much as 75 percent?

What Is The Thumbprint Signature Program?

Originally developed by the Texas Bankers Association, the Thumbprint Signature Program is designed to deal with the growing problem of check fraud by requiring all non-account holders to be fingerprinted before a participating financial institution will cash their check.

The fingerprint is extracted using a special inkless pad that leaves no residue. The thumbprint is placed between the memo and signature lines on the face of the check and is used by law enforcement officials only in cases where fraud is suspected.

Since its inception, the program has spread to 38 endorsing state bankers associations. Participating institutions are reporting a significant reduction in losses from fraudulent checks cashed at teller windows since implementing the program. Numerous Indiana financial institutions are already taking a bite out of check fraud by participating in the program.

Thumbprint Signature supplies, including touch pads, door decals, teller window displays and statement stuffers, are sold exclusively by the IBA at member discounts ranging from 20% to 50%.

Questions About the Thumbprint Signature Program

Following is a summary of some of the most frequently asked questions about the program from participants and other interested parties:

Will the fingerprint actually be visible on the check?
Yes, the fingerprint will be immediately visible on the check so that a bank employee can tell if there is a good impression. The "inkless" feature refers to the fact that the fingerprint pad will not leave a residue on your hand. In addition, the print is clearly visible on a photocopy or microfilm of the check.

Will the inkless fingerprint pad fit through the pneumatic tubes in the drive-through?
Yes, the pad is only about two inches in diameter and should easily travel through the pneumatic tubes in the drive-through. The decision to implement the program at a drive-through is at the discretion of the individual financial institution.

Can a bank require a fingerprint on a government check?
Yes, a bank can require a fingerprint when cashing a government check for a noncustomer, provided that the bank has not entered into an agreement with a regulator or other government entity under which it agrees to cash government checks for noncustomers on the same terms as it cashes checks for its customers.

Where are the thumbprints stored, and is a database maintained?
The thumbprint check travels through the normal channels of the bank, just as any check would. The checks are not segregated and no database is maintained. The thumbprint checks are used by law enforcement agencies only in the case of check fraud.

What should I do if I suspect fraud?
Tellers and officers should follow established reporting procedures regarding known or suspected fraudulent transactions, including contacting local law enforcement personnel, as well as the FBI.

What about the angry noncustomer?
The program has met with only minimal public criticism (less than 1% of noncustomers refused to provide thumbprints in the pilot program). If a noncustomer objects to providing a thumbprint, you have two options: invite him/her to open an account or refer the person to another institution. Not all banks are going to participate in the program. Although it is best if bank personnel avoid engaging in a discussion of the legalities of the program, you should be assured that the request for a thumbprint of a noncustomer is not a violation of either federal or state laws.

Must the bank obtain a fingerprint on every noncustomer?
Each bank participating in Thumbprint Signature is advised to have written policies and procedures governing how the program will be used. Although a bank has some discretion in establishing its policy, it is critical that the policy is applied consistently to avoid allegations of discriminatory treatment. For example:

• If a bank's policy is to require a fingerprint on all noncustomers cashing a check, whether an "on-us" check or otherwise, the policy must be applied consistently. Tellers and other bank personnel should not be authorized to waive or modify the policy.
• A bank can establish a dollar threshold below which it will not require a fingerprint. Again, the policy must be applied consistently. Tellers and other bank personnel should not be authorized to waive or modify the policy.
• A bank can choose to cash "on-us" checks without requiring a fingerprint; however, because stolen or forged payroll checks often account for a significant portion of bank losses due to fraud, such a policy could dilute the effectiveness of the program. Again, the policy must be applied consistently. Tellers and other bank personnel should not be authorized to waive or modify the policy.
• A small community bank can choose to fingerprint only those noncustomers living outside their market area, if the boundaries of the market area are explicitly defined in the bank's policy. A subjective determination by a teller or other bank personnel of whether a particular address is in the market area should be avoided. The policy must be applied consistently. Tellers and other bank personnel should not be authorized to waive or modify the policy.

These are just a few examples of the way a bank can structure its policy on the Thumbprint Signature program. Generally, the simpler the policy, i.e., requiring fingerprints on all noncustomers, the easier it will be to carry out. In evaluating your policy, be mindful that unlawful discrimination can occur in three ways:

• When a policy is discriminatory on its face;
• When a policy is not discriminatory on its face, but is applied in a discriminatory manner;
• When a policy is neither discriminatory on its face nor applied in a discriminatory manner, but has the effect of discriminating against a protected class.

For more information about the Thumbprint Signature program, please contact Paul Freeman at the IBA office 317-387-9380.

General Information and Recommended Operating Policies

General Information
On December 1, 1995, a number of Texas financial institutions began using a new security device known as the Thumbprint Signature touch pad. The touch pad is intended to deter counterfeit and stolen check fraud by obtaining a Thumbprint Signature (fingerprint) from non-customers (customers who do not have a depository relationship with the institution) when cashing on-us and not-on-us checks. The Thumbprint Signature can be used by law enforcement agencies in the investigation of fraud claims made by account holders, and financial institution's usage of the program is a natural deterrent. Participants will not retain the Thumbprint Signature in their files and the signature will be shared with law enforcement officials only in cases of suspected fraud.

Background
The Texas Bankers Association developed the Thumbprint Signature program in conjunction with the Clearing House Association of the Southwest, after pilot programs in Arizona and Nevada were found to be significantly helpful in decreasing check fraud. Since the inception of the program, the test group of participating banks has experienced an average 60% reduction in fraudulent checks passed by non-customers.

Thumbprint Signature has become very popular with banks of all sizes because it offers an easy, inexpensive way to prevent fraud without inconveniencing customers. More than 240 Texas financial institutions now participate in the program, and this number does not include branch locations for the many institutions that have more than one facility. With the help of the TBA, a total of 38 states have already implemented or will soon launch similar programs. Other participants include a wide variety of businesses such as check cashing establishments, liquor stores, grocery and convenience stores and more.

While the program is designed to deter check fraud it has also proven to be an effective crime-fighting tool. In the Austin area alone, Thumbprint Signature has been used in more than a dozen check fraud cases, and at least two criminals have been convicted and are currently serving jail sentences.

Touch Pad Description
The touch pad is a two-inch inkless fingerprinting device that leaves no residue on the finger. Users simply rub their fingers together and any remaining ink disappears. The touch pad is not the same as an inkpad and will not leave ink on a user's finger or clothing.

How the Touch Pad Works
The presenter of the check presses the thumb of his or her right hand on the pad and places the impression of the finger on the face of the check between the memo and signature lines. If the presenter is disabled and cannot use his or her right thumb, an impression of the left thumb is placed on the check and noted "left hand" on the check next to the thumbprint. Should both thumbs be disabled, an impression of the right index finger is taken and "right index finger" is noted next to the print.

NOTE: The Thumbprint Signature is not used as identification, but is recorded in addition to customary I.D.

Care of Touch Pads
Touch pads should be closed when they are not being used to prevent the pads from drying out. The pads, when cared for properly, will last up to 18 months or will produce 400 to 600 impressions before having to be replaced.

How to Obtain Thumbprint Signature Pads
The Indiana Bankers Association has arranged for a group purchase of Thumbprint Signature pads. All participating Indiana financial institutions must place their orders through IBA. IBA will warehouse a quantity of pads to respond to orders from participants. Supplies can be ordered online or by downloading the PDF brochure. 

When to Obtain a Thumbprint Signature
A Thumbprint Signature should be obtained when:

• A non-customer presents an on-us or not-on-us check for encashment. This includes employees of commercial or business account customers who present payroll checks drawn on the participating institution.
• A non-customer presents an on-us check for exchange to a cashier's check.
• A non-customer presents a government check for encashment.

NOTE: To comply with all applicable federal laws and regulations, a Thumbprint Signature should be obtained from every non-customer every time a check is presented for payment. Distinctions should not be made based on appearance or suspicious versus nonsuspicious circumstances. Financial institutions in rural markets may want to develop a specific policy requiring a Thumbprint Signature only from non-residents of the community or county, but it is important to apply equal treatment to all noncustomers once a policy is adopted.

Use of the Program in Drive-In Facilities
It is recommended that non-customers seeking to cash checks be required to enter the premises to complete their transaction and to affix their Thumbprint Signature to the face of the check. Some participants may elect to adopt policies providing for the use of Thumbprint Signature pads in drive-in facilities and others may elect to permit non-customers to cash checks through drive-in facilities only after normal banking hours.

Reaction of Law Enforcement Authorities and Bank Regulators
Details of the Thumbprint Signature program have been shared with the FBI, many local law enforcement authorities, and the bank regulatory agencies, and the program has received widespread support from these and other groups.

Program Identification, Customer Awareness, and Collateral Materials
A Thumbprint Signature logo has been developed and generic customer information materials are available for use in making customers and non-customers aware of an institution's participation in the program. It is recommended that participants use a Thumbprint Signature decal on all entrances to banking facilities. Security professionals believe that this early visibility of the program will act as a significant deterrent.

Notification to Business/Commercial Customers
It is recommended that all participating financial institutions write to their business/commercial customers at least two weeks prior to implementing the Thumbprint Signature program. Letters and/or follow-up telephone calls should encourage these customers to notify their employees that a Thumbprint Signature will be required if the employees are not depository customers of the institution. Notification of the program is a courtesy to business/commercial customers and will assist in the process of making the policy known to larger numbers of non-customers who may seek to cash checks. IBA has prepared a prototype letter for use in notifying customers.

Steps to Use in Obtaining a Thumbprint Signature
Tellers and other personnel should use the following procedures to obtain a presenter's Thumbprint Signature:

Step 1: Obtain required identification from the presenter.

Step 2: Explain the following to the presenter:

"In order to protect the bank's depositors, we require a Thumbprint Signature on the face of the check. The touch pad is not like an inkpad and will not stain hands or clothes. Our bank has joined other Indiana financial institutions in implementing this program to eliminate check fraud."

If necessary, demonstrate use of the pad by obtaining your own fingerprint. Rub your index finger with your thumb to show the material quickly disappears.

If the presenter refuses to provide the Thumbprint Signature, return the check to the presenter and explain the bank will not cash the check.

Step 3: Request the Thumbprint Signature by stating the following:

"Please press your right thumb on this pad and then press the finger onto the check-right here (pointing to the area of the check between the memo and signature lines)."

Obtain the presenter's Thumbprint Signature between the memo line and signature line. If this is not possible, select a clear place on the face of the check away from all writing and printed information.

If the presenter "drags" their finger, request the Thumbprint Signature again and instruct the presenter to place the signature in a clear spot on the check.

Step 4: Record the identification information on the check and return the identification to the presenter.

Step 5: Process the transaction utilizing normal operating procedures.

Suspicious Activity
If the presenter leaves the branch abruptly, and leaves the identification or the check, immediately contact a supervisor or your security personnel. Tellers should document the time and date of the transaction and the presenter's description. Tellers and officers should follow established documentation and reporting procedures regarding known or suspected fraudulent transactions.