Chicago Banks to Implement Fingerprinting Program to Combat Check Fraud

Chicago's largest banks are preparing to introduce a new program that requires consumers to provide thumbprints when cashing checks at banks other than their own. This widely used but controversial practice, developed by Texas banks in 1995 and implemented in 36 states, aims to prevent check forgeries. Banks believe that fingerprinting is the most effective way to thwart the recent surge in counterfeit checks in Chicago, which has cost area banks at least $10.3 million over the last 15 months.

Key Takeaways:

• Chicago's biggest banks, including First Chicago NBD Corp. and LaSalle National Corp., plan to launch fingerprinting programs in the coming months to prevent check forgeries.
• The program will require consumers to provide thumbprints when cashing checks at banks other than their own, with customers who cash checks at banks where they have accounts exempt from the requirement.
• Banks believe that fingerprinting is the most effective way to prevent check forgeries, with officials saying it sends a message that all banks are serious about combating crime.
• Consumer groups and civil libertarians have raised concerns about the program, arguing that it raises privacy issues and intimidates low-income people.
• Proposed legislation in California to ban the practice of fingerprinting by banks and businesses died in a state Senate committee.
• Wells Fargo & Co. has introduced the program at its branches in 10 states over the last two years, with only a handful of complaints received.

Statistics:

• The recent surge in counterfeit checks in Chicago has cost area banks at least $10.3 million over the last 15 months.
• Check fraud at Wells Fargo has dropped 29% since the bank introduced the fingerprinting program.
• Texas banks have seen fraud losses drop 37% to 86% since implementing the program.
• Banks spend about $4 for each small pad of an ink-like substance used in the fingerprinting process.
• 36 states have implemented a similar fingerprinting program to prevent check forgeries.

Sources:

• CRAIN'S (August 10)
• Illinois Bankers Assn.
• First Chicago NBD Corp.
• LaSalle National Corp.
• Wells Fargo & Co.