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
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 63% 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. Over 175 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. In response to the success of the Texas program, a total of 30 states have already implemented similar programs, now including Delaware (see attached list). 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, Texas 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 ink pad 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.

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 non-suspicious 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 non-customers once a policy is adopted.

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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.

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 ink pad and will not stain hands or clothes. Our bank has joined other financial institutions in implementing this program to eliminate check fraud."

If necessary, demonstrate use of the pad by obtaining your own fingerprint on scrap paper. Rub your index finger with your thumb to show how 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.”
(Point 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.

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SUSPICIOUS ACTIVITY
If the presenter leaves the branch abruptly, and leaves the identification or the check, immediately contact a supervisor or 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.

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

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. DBA has prepared prototype letters for use in notifying customers.

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 this early visibility of the program will act as a significant deterrent. Camera-ready materials are available for institutions wishing to customize the materials with their own names and logos. Camera-ready art or generic materials may be purchased from the Delaware Bankers Association, 5 E. Reed Street, P.O. Box 781, Dover, DE 19903. Call Susan Highfield at 302-733-7452 for more details.

MEDIA RELEASES/COVERAGE
Participating financial institutions may elect to issue a local news release announcing their participation. If they are not already familiar with the program, local law enforcement agencies should be briefed so they can be supportive if contacted by the media for comment. If you would like to alert the press about your participation in the program, sample media communication information is enclosed.

POSITIVE REMINDERS
The Thumbprint Signature of an individual cannot be forged.

The American Bankers Association, and 30 state associations have determined that one way to reduce check fraud is to implement a program using the Thumbprint Signature and Inkless Pad.

The Thumbprint Signature leaves a clear, clean fingerprint for positive identification and is very easy for an individual to clean off of their finger.

There is no expensive electronic equipment to install and maintain.

There are no files to be kept.

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HOW TO OBTAIN THUMBPRINT SIGNATURE PADS AND OTHER MATERIALS

All participating Delaware financial institutions must place their orders through DBA which will respond to orders from participants. An order form is included with this information.

Call Susan Highfield at the Delaware Bankers Association
at 302-733-7452 or Susan.Highfield@debankers.com for more
information.

MOST FREQUENTLY ASKED QUESTIONS

The following is a summary of some of the most frequently asked questions about the Thumbprint Signature program from participants and other interested parties.

How does my financial institution participate and order supplies?

Financial institutions can join the program any time simply by contacting the Delaware Bankers Association (DBA) at 302-733-7452 or Susan.Highfield@debankers.com. Once an institution is signed up, DBA is able to fill and ship the orders on the same day received; however, please allow time for shipping.

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.

Can a bank require a fingerprint on a government check?

Yes, a bank can require a fingerprint when cashing a government check for a non-customer, 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 non-customers on the same terms as it cashes checks for its customers.

Where are the thumb prints stored, and is a database maintained?

The Thumbprint Signature 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 thumb printed checks are used by law enforcement agencies only in the case of check fraud.

What should I do if I suspect check 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 non-customer?

The program has met with only minimal public criticism (less than 1% of non-customers refused to provide thumbprints in the pilot program). If a non-customer objects to providing a thumbprint, you have two options: invite him/her to open account, or refer the person to another institution. Not all banks are participating in the program at this time. 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 non-customer is not a violation of either federal or state laws.

Must the bank obtain a fingerprint on every non-customer?

Each bank participating in the Thumbprint Signature program 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 non-customers 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 town bank can choose to fingerprint only those non-customers living outside their county if the boundaries of the county 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 county 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, e.g., requiring fingerprints on all non-customers, the easier it will be to carry out. In evaluating your policy, be mindful that unlawful discrimination can occur in three ways:

1. When a policy is discriminatory on its face; e.g., it only applies to individuals within the legally protected classes; i.e., race, color, religion, national origin, sex, or marital status.
   
   
2. When a policy is not discriminatory on its face, but is applied in a discriminatory manner; e.g., the bank will not cash checks for people who live in certain communities; however, the majority of the people living in those communities are in one of the protected classes.
   
   
3. 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; e.g., requiring an excellent credit report for all job applicants; however, it may have a discriminatory affect against women and minorities since these protected classes historically have worse credit histories than non-protected classes.

Wouldn't This Be Considered Prejudicial To Certain Groups?

No. The Federal Reserve has determined that this program is not a violation of CRA or any other regulatory issues.

The Thumbprint Signature would be required of all non-customers cashing checks above certain pre-determined amount that is consistently followed. An exception would be the individual who is physically challenged and unable to provide the fingerprint signature.

For more information about the Thumbprint Signature program,
please contact Susan Highfield at the DBA at 302-733-7452, or Susan.Highfield@debankers.com

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MEMBER ORDER INFORMATION & FORM

All items listed below feature the Thumbprint Signature logo printed in red and black.

Touch Pads - the pads have a shelf life of 18 months or a minimum of 500 impressions. Banks should order enough for all tellers, and drive-up windows.

Decals - banks should post decals at all entrances to let people know they are participating in the program and to warn potential criminals that their crimes will not go undetected. Banks may also want to post decals in their drive-through stations.

Teller Window Display - banks should post these 6" x 3" "tent-style" display signs at all teller windows as an additional reminder that they participate in the program. The signs read:

"For the protection of our customers,
Thumbprint Signatures will be obtained from all
non-account holders seeking to cash checks."

Statement Stuffers - these 3.5" x 7.5" brochures explain the mechanics of the program. Banks should send them as a public service announcement to all account holders and have plenty available for anyone who might have questions about the program. The stuffers are printed in both English and Spanish (the Spanish translation can be deleted upon request). Please order in increments of 500.

Please complete the attached order form and fax it to:

DELAWARE BANKERS ASSOCIATION
Attention: Susan Highfield
302-733-7206 FAX
Susan.Highfield@debankers.com

QUESTIONS???
Call Susan Highfield at 302-733-7452