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Deluxe Corp. Bolsters Fraud Detection

Effectively managing red flags rules compliance programs goes beyond just identifying flags and documenting the compliance process. So, many mortgage brokers and servicers are finding that they need to outsource compliance programs but also find a way to decrease the operational costs due to manual reviews.

As a means to help small-tier mortgage brokers and servicers comply with the red flags rules issued by federal financial institution regulators, Deluxe Corp., a Shoreview, Minn.-based provider of products to help small businesses build their brands, has added ID Analytics for Compliance to its existing suite of fraud protection services to help its clients improve fraud detection rates, automate compliance with the red flags rules and reduce operational costs.

ID Analytics for Compliance detects and automatically resolves identity fraud-related red flags during check ordering for direct deposit accounts. It enables financial institutions to better focus their limited resources on reviewing the riskiest transactions thereby reducing fraud and the associated operational costs. As a component of Deluxe OrderScreen, ID Analytics for Compliance will provide compliance benefits for Deluxe's financial institution customers, including an additional layer of protection for account holders against fraudulent requests for printed checks.

"The effectiveness of a financial institution's red flags rules compliance program is largely dependent upon the risk controls and accountability of its business partners. It's why we're always looking for the latest ways to detect, prevent and mitigate identity theft," said Bernard McManus, director of new product innovation for Deluxe.

Deluxe OrderScreen streamlines orders for Magnetic Ink Character Recognition products by analyzing order, address, channel and identity attributes that help detect, prevent and mitigate identity theft. For high-risk transactions, the solution will invoke ID Analytics to evaluate those transactions for identity risk using the ID Network, a real-time, cross-industry compilation of identity information that includes more than one billion consumer transactions and more than two million reported frauds.

The ID Analytics for Compliance product includes three combined products: ID Score, ID Analytics' flagship identity fraud detection system that detects identity misuse in real time by leveraging data within the ID Network; ID Network Attributes for Compliance, which generates red flag indicators related to identity validation, velocity, fraud characteristics and the Patriot Act; and Certain ID, which generates and delivers authentication questions for high-risk transactions.

Under the red flags rules, financial institutions and creditors must implement identity theft prevention programs to identify, detect and respond to activities that could indicate identity theft. The rules apply to creditors and mortgage brokers. The deadline for compliance by financial institutions was Nov. 1, 2008, while the deadline for other creditors has been extended to Aug. 1, 2009.

The ID Analytics for Compliance software enables organizations to both identify and automatically resolve red flags that indicate the potential for fraud in a transaction. An example of a red flag would be a check printing order that includes a mailing address known to be associated with fraud. Once a red flag is triggered, an organization must then resolve the flag, which generally requires manual intervention for regulated companies.