Counterfeit Detection Overview
Over the past several decades, nearly all categories of fraud involving forgery have shown a consistent and disturbing year after year upward trend. The evolution of sophisticated printers, computer software and the remarkable power of internet “dark markets” have increased the capacity of non-professional counterfeiters to create realistic fake documents and avoid detection by regulators and law enforcement. This, in turn, has spurred a cottage industry of outlaw counterfeiters - which in turn has flooded the market with forged documents for the purpose of defrauding the public.
Criminal forgers aim to replicate a document that conveys some value or benefit to the person who possesses it. The ability to recognize, reject, and prevent forgery is of paramount importance to any organization. The potential for fraud loss is obvious. Beyond the financial burden, businesses can also lose credibility – and customers – if their fraud-prevention measures prove inadequate. In addition, failure to properly validate documents can result in legislative, regulatory and judicial punishment in the form of fees, penalties, civil litigation and even criminal prosecution.
Currency and identity records, of course, are common forgery media, but any document with intrinsic value can be counterfeited, from cash to checks to credit cards – even store coupons.
While the US Treasury reports that only about 1 in 10,000 U.S. Federal Reserve notes are bogus, the amount of forged money passed and later discovered has been growing. The increase in counterfeit currency mirrors the evolution of low-cost, high-quality imaging and printing technology. Before this equipment became readily available, “passed” counterfeit currency remained relatively steady –$39.2 million in 1999, $48 million in 2001 and $42 million in 2006. But the numbers skyrocketed 63 percent to $62 million in 2006 and another 66 percent to $103 million in 2013. The trend continues, with $156 million – more than half collected in the United States – identified in 2015. As technology has made it easier to produce viable counterfeit banknotes, the number of such counterfeits circulating has increased.
Anecdotally, we can validate this information through the conversations our company has with our U.S. customers on a daily basis. Retail businesses – whether involved in merchandising, food service, hospitality or financial services – report that the losses experienced at the store level due to counterfeit currency are increasing at exponential rates. In fact, it is our belief that the officially quoted numbers are under-reported, and that circulating counterfeit currency numbers are much higher than those provided by the Secret Service and the General Accounting Office.
Real-Time Point of Transaction Counterfeit Detection
There is no logic to the idea that you should be identifying counterfeit payments in the back-office as part of your reconciliation process. What is the point of discovering you have experienced a loss when the forged money is already in your pocket and the criminal fraudster is long gone?
Historically, FraudFighter made its name by pioneering the very fundamental concept of checking documents – currency, credit cards, identity documents and other important items – at the point of the transaction, while the transaction is occurring. Today, this remains the core of our loss prevention philosophy. Our product line has evolved, but in many ways, the principle remains the same.
Regarding counterfeit currency detection, the product that is right for you can be fairly simply determined by deciding what type(s) of document you need to verify. If you are only concerned with currency banknotes, then our line of automated currency authenticators may be your best bet. If, on the other hand, you need to look at a broader spectrum of documents, then the UV Product line might be right.
Of course, the degree of risk exposure and the transaction volume will also play a role in determining the best solution.
We are always happy to speak with you to help you sort this out.