How You Can Prevent

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• How You Can Prevent
• Fraud at Your Bank
• With a Simple, Low Cost Tool
• A Review of the
• Washington Mutual Case Study

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Counterfeit Currency Activity increases 160
Financial institutions absorb 5 billion to 11
billion in total fraud losses associated with
resolving unauthorized retail transactions
For every 1 of fraud, merchants on average are
paying more than 3.
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Company Background

• Founded in 2000
• Pioneered Point Of Sale counterfeit fraud
  detection in enterprise accounts
• Company has transitioned into fraud prevention
  specialist
• Multiple layers of Fraud Prevention
• UltraViolet, Automated Currency Detection, Image
  Capture, Validation and Authentication

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Counterfeit Fraud at the Bank Branch

• Nearly Every Transaction Conducted in the Bank
  Branch Presents the Opportunity for Fraud to
  Occur
• Accepting Negotiable Instruments (counterfeit, ID
  Fraud)
• Opening a New Account (ID Fraud)
• Granting Access to an Existing Account (ID Fraud)
• Application for Credit (ID Fraud)
• Other Bank Services
• Wire Transfers (counterfeiting, ID fraud)
• Bill Payment (counterfeiting)
• Official Checks, etc. (Counterfeiting, ID Fraud)

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Quantifying Counterfeit Fraud and Identity Theft
Losses

• 400 million in counterfeit currency in the U.S.
  (2009 US Treasury) 182M confiscated by Secret
  Service in 2008
• 12.2 billion in losses due to check fraud(2008
  American Bankers Association)
• 21 billion Identity Theft in 2011, 12.6 million
  victims Up 1 million victims from 2010
• 31 billion in US existing account fraud(2009
  Javelin Strategy and Research)
• 221 billion worldwide per year due to identity
  theft (Aberdeen Group)

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Javelin Strategy Research Report

• Identity Theft

• In 2012 identity fraud incidents increased by
  more than one million victims and fraudsters
  stole more than 21 billion, the highest amount
  since 2009. The study found 12.6 million victims
  of identity fraud in the United States in the
  past year, which equates to 1 victim every 3
  seconds.

Javelin Strategy Research,
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What Do Criminals Do with Stolen Identity?

• Launder Money
• Wire Transfers
• Bank Checks (money orders and cashiers checks)
• Transfers between accounts
• Loan Laundering
• BSA regulations designed to curb these activities
• Apply for Fraudulent Loans
• Cash Stolen or Fake Checks
• Account Hi-Jacking accessing someones
  account and draining the assets

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Washington Mutual2007

• 2,239 retail branch offices operating in 15
  states,
• Pioneered casual Occasio branch designs
  kiosks instead of long teller counter
• Targeted lower-tier customers with low credit
  scores and other borrowing or banking issues
• Became a leading issuer of Sub-prime mortgages
  and credit cards
• Forced into receivership by FDIC in 2008, assets
  assumed by J.P. Morgan-Chase (Now Chase Bank)

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WAMUCase Study

• Grass Roots Movement
• Branch Manager in O.C. started the process
• Bought UV-16 Units with his own credit card
• Word spread around Southern California
  eventually nearly 50 branches direct-purchased
  units
• Regional Loss Prevention Manager observed results

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Ultra-Violet Detection in the Bank Branch
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Ultra-Violet Detection in the Bank Branch
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WAMUCase Study

• Initial Pilot Project
• Early-Adaptor branch success impressed management
• Decision to pilot-test UV-16 in 70 branches in
  Florida and California
• 800 units shipped to problem branches - May
  2005

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WAMUCase Study

• Pilot Project Results
• Within 90 days, WAMU project manager reported
  the test had been very successful, with
  numerous stories
• One fraudulent HELOC loan prevented - 92,000
• Fake driver license detected in-branch
• Two perpetrators arrested in branch parking lot
• Dozens of fraudulent /stolen checks prevented
• Numerous incidences of counterfeit currency
  detected
• Decision reached rapidly to expand roll-out to a
  wider cross section of branches

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WAMUCase Study

• Expanded Implementation Project
• 4 regional roll-outs with 200 branches in each
  region were selected for observation. November
  2005
• Project control shifted to Seattle HQ, with
  C-Level support of the operation
• 5,200 units shipped to roughly 800 branches
  within 3 months of pilot project completion
• Results to be observed for one year

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WAMUExpanded Roll-Out Results

• Expanded Implementation Project
• 11 months after roll-out of 5200 additional
  units, the WAMU Strategic Sourcing Group provided
  the following results to us
• Over 20,000,000 of fraud prevention savings were
  realized
• 5,200 units cost to implement less than 300,000
• ROI for the first 11 months almost 70-to-1
• Annualized ROI greater than 80-to-1

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WAMUFinal Roll-Out

• Within 6 months of completion of the Expanded
  Pilot Project, WAMU Strategic Sourcing prepared
  to make a purchase to equip all remaining
  branches.
• On July 31, 2007, a purchase order for 21,800
  additional UV detectors was received.
• In total over 29,000 UV detectors eventually
  installed in WAMU branch locations.
• 20M saved during first year of expanded roll-out
  more than paid for the entire deployment of
  29,000 which cost approx 1.6M

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Typical Washington Mutual Branch Equipment

• 10 UV detectors divided between model POS15 and
  UV-16 units
• POS15s installed at kiosks
• UV-16s installed at desks and countertop
  locations
• Average per-store cost of around 600, delivered

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Summary

• Counterfeiting Activity across the Board is on
  the Rise
• Losses from Counterfeit Fraud often more than 3 X
  the dollar loss due to associated expenses
• Greatest Counterfeit Threat to Banks comes in the
  form of fake ID documents
• FraudFighter UV lights are
• Inexpensive, easy to use, easy to install, easy
  to train employees
• WAMU project showed that nationwide roll-out will
  produce break-even nearly immediately, and
  tremendous ROI over the life of the product

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Thank you for your Time!

• Any Questions?