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    TECHNOLOGY: Checkmate

    A fraud ring and an IRS audit convinced Jimmy's GK Food Mart to go digital.

    Following every hurricane season, the city of Vero Beach, Fla. draws scores of roofers who come to the area to repair homes damaged by the storms. Each year these roofers, many of them day laborers without bank accounts, cash their checks at Jimmy's GK Food Mart, a local convenience store that offers check-cashing services to local businesses.

    Last year was no different from the rest, until one Monday following the roofers' Friday payday, when the bank returned about 25 checks, each ranging from $300 to $400, each of them fraudulent.

    "They copied everything identically," says Sameet Patel, GK's manager, and son of the store's owner. "They hit us for $12,000 that day. It was money lost."

    He wasn't alone. All told, the forgers made off with over $40,000 from local retailers that day. What employees of the stores couldn't detect about the fakes is that their MICR lines weren't printed with magnetic ink.

    At the same time, Patel was undergoing an audit by the Internal Revenue Service. The $12,000 loss, plus the hassle of dragging bundles of checks from storage, almost drove him from the check-cashing business altogether.

    Patel was already evaluating check-imaging printers to eliminate the need to store checks; being victimized by fraud sealed his decision to buy such a printer. He installed the i6090 Check Scanner and i6000 Internet Client software from Kodak to take care of both problems at once.

    The check-imaging solution converts paper checks into high-quality digital images to take advantage of check-clearing efficiencies presented by the federal Check Clearing Act for the 21st Century. Better known as Check 21, the solution allows retailers to scan checks as soon as they're received and transmit data and electronic images electronically to banks for same-day processing, thus crediting their accounts more quickly.

    "I scan each check, and the software automatically totals check amounts, withdraws the money from customer accounts, and deposits the funds into the store's bank account," explains Patel.

    In addition to streamlining and accelerating check clearing, the solution has also decreased bank service charges, according to Patel. "We cash about 4,000 checks per month," he says. "Prior to having the solution, we were charged 30 cents per check deposited. Now we're only charged 20 cents per deposit, regardless of the number of checks and the amounts involved. It saves us a significant amount, and has already paid for itself."

    The software enables Patel to audit his accounts, and every month, his bank sends him a CD containing images -- front and back -- of each check deposited during the previous 30 days.

    What's more, the check scanners can automatically detect if a check doesn't use magnetic ink, meaning that next time fraudsters try to pass bogus checks, the bank won't be returning them to Patel a few days later. He'll return the bad check to the customer on the spot.

    Then he'll call the authorities.

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