Document Security

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A Guide to Document Security
This is taken from Appleton Papers’ "Your Guide to: Document Security".
Reprinted with permission.

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Threat Definition 
Any discussion of document fraud needs to consider the task of identifying the threats to document security as they exist today and as they will likely exist in the future. All documents that have value or the potential to create value are subject to fraud. To limit the scope of the document to checks is a miscalculation of the nature of document fraud. It is certain that criminal techniques will evolve as defenses do

Protecting Originals  
First and foremost is the need to protect access to genuine documents of value. Far too many instances of fraud are a result of negligent practices with regard to access to genuine documents or document processing equipment. The best way to commit document fraud is with a genuine document. Weak procedures to ensure protection serve as an open invitation to crime.

A part of protecting original documents is the need for an effective audit program. All items of value should be given a serial number of some type to permit reconciliation of lost or stolen items. It should be common practice to separate responsibilities within an organization. By this we mean that this could be construed as negligent to have the same individual write, sign and reconcile checks. In some cases, employers are deemed responsible for the acts of employees and a failure to provide for separation of duties contributes to the problem.

It should become common practice to protect any and all reference to account numbers and documents that can lead to unwanted access. All papers to be disposed of containing any reference to such information should be shredded as should any carbons that may contain confidential data. All packages containing valuable documents should be labeled with product code numbers and not descriptions such as "voucher checks" inviting unwanted access.

Lastly, for genuine documents, it is important to conduct periodic reviews of your security measures. Criminals will often take the time to understand your security program and attack at the point of weakness. For example, if your protective measures are implemented for items with a value of $500 or greater, sooner or later you may fall victim to crime in the $490 range. While one should not become obsessive about security, certain common sense protective measures are in order. There is little to gain by telling too many people every detail of your security measures.

Counterfeiting  
A primary threat today is the unauthorized reproduction of documents for unlawful purpose. This reproduction may take place via document scanners with computers, phone copiers, or illegal printing operations.

Desk top publishing software has created enhanced capabilities for the creation of documents that look quite similar to the real item. Current costs of scanning equipment, personal computers and laser printers have put this technology well within reach of criminals. For a mere ten thousand dollars or less. The criminal scans a document into the system and can manipulate variable information creating output that can easily be used for fraud.

The color copier has evolved over the past few years into a device that is accessible to almost anyone. There are no particular skills required to operate a copier. This makes the color copier the single largest threat of document fraud today. If one lacks the money for purchase, there are lease options, or a trip to the neighborhood retailer where copies may be obtained for a nominal fee. The color copier creates convincing duplicates. This opens the door to the casual criminal who otherwise, would be deterred from such a practice. The presence of a color copier at retail establishments provides greater mobility for the criminal.

There are a number of instances where members of a perfectly legitimate printing company have obtained access after hours to produce counterfeit documents. From time to time, one reads of clandestine printing operations that are established solely for illegal purposes. A printing operation requires far greater investment and expertise to put into operation than other methods of counterfeiting.

Forgery  
The alteration of a document for unlawful reasons is still a major concern. 66.7 billion checks were written and transacted in 1994. Suffice to say, they are accessible to the criminal. Two thirds of all checks written are used to pay bills. In the interest of "float," these checks are sent through the mail. This can be very secure and at times not. Consider how many times you enter a home or an office and there are stacks of bills waiting to go out. Or the criminal could easily go "fishing" in the neighborhood post box and obtain envelopes containing checks.

Detection of Fraud 
There are two issues that are fundamental to fraud detection. They are detection of a fake document and the authentication of an original document. Both are important aspects in combating fraud and every effort should be made to strike a balance of features to provide optimum protection.

Detection of the fake implies that there has already been a crime. The document has been altered or replicated. Certain features are designed to make replication more difficult to accomplish and visibly detectable by persons being asked to accept the document. Keep in mind that detection of a fake can be more difficult in many cases as the person being asked to accept the document has no idea what the original was supposed to look like. The ability to detect the fake is vital to the protection of persons who receive documents in good faith from unscrupulous types.

Authentication of the original is also difficult when one doesn’t know what the document was supposed to look like. Authentication must be easily accomplished in a variety of environments to be effective. Key words like "safe" or "original" are useful but not fool proof. The goal is to create visible information that can be reasonably expected to permit a person to verify that the document is genuine.

By washing or scraping information off a legitimate document, the criminal can alter such items as the "pay to" name to his or her own benefit. With automated deposits and document- processing, there is little likelihood of being caught.

Legislative and Judicial Issues  
It is important to note that this document should never be considered legal advice. Every situation must be reviewed for its own merit by an attorney.

Persons that are engaged in the production, storage, or transportation of valuable documents must take reasonable care to protect these items from unauthorized access. A person or company that possess plates, films, work in process materials, or finished goods belonging to another must take reasonable care to see that these materials are safe from unauthorized access or be potentially held liable for loss resulting from unauthorized access.

There has been much discussion about the need for suppliers to make "security features" available to customers as protection against allegations of contributory negligence. The prevailing opinion is that a provider of documents having value should make all customers aware that security features should d be included in the documents but does not have a duty to include them if the suggested features are declined by the customer.

The Uniform Commercial Code  
The Uniform Commercial Code or UCC is a set of federal guidelines that are issued to reduce conflicts between individual states engaged in interstate commerce. While not mandatory, code guidelines are usually adopted by each state in due course.

During 1990, the UCC was amended to reflect a shared responsibility stance in the area of check fraud. As of October 31, 1995, forty three states have adopted these revisions to the code. Prior to this change, the banking industry was held to a strict responsibility for losses resulting from check fraud. The code now specifically states that "persons or companies that are found to be comparatively negligent in the causes of fraud may be precluded from legal remedy in the recovery of loss." Simply put, if a person or company can be shown to have been negligent, by act or omission, in that which caused the fraud, they may be subject to a sharing of the loss or at a minimum may be precluded from legal remedy in the recovery of the loss.

The Code does not specifically define the aspects of comparative negligence. Rather, tests will take place within the court system on a case by case basis. The yardstick will be if a reasonable person would have been expected to take certain steps to prevent the crime but failed to do so. This will result in constant change to the concept of "reasonable" or "ordinary care. "

The practicality of the situation must be understood. A bank that has been hit with a substantial loss to fraud will have to examine the possibility of losing a customer they may have to sue to avoid the loss. There is strong likelihood that banks will more forcefully recommend various fraud prevention techniques to customers declaring that refusal to accept the suggested techniques may create a transfer of responsibility, from the bank to the customer. Already a couple of such legal proceedings have been filed but were settled out of court.

Banking Issues 
The banking industry is faced with mounting losses due to check fraud. Competitive pressures and the need to protect profits, have and will continue to change U.S. banking procedures The essence of fraud is very different from the banking industry’s point of view. They can only respond to that which they control. To that end, they must take every step possible to avoid the transfer of value to the criminal. This is best accomplished by placing a hold on deposited funds until such time as a document and an account balance may be verified. The problem is that criminals can move faster than banking.

Regulation CC, The Expedited Funds Act  
In 1990, regulation CC, The Expedited Funds Act, was passed by the Federal Reserve. The act calls for banks to make funds available to depositors within two working days for local checks and within five working days for non- local checks. The reality of the situation is that banks must make funds available by either the same day or the next day for competitive reasons. Depositors won’t wait for access to their money. Banks that place holds on funds will chase depositors to banks who don’t. The result of this pressure to make deposits more readily available means greater access privileges by criminals.

Electronic Check Presentment (ECP)  
ECP is the transmission of check information electronically with the paper to follow. Banks involved in the transaction must be ECP participants. ECP permits information to be moved on a same day basis where it can be processed to verify the account balance. An invalid account results in a return item notice to the bank of first deposit and the funds may be withheld protecting the bank from loss.

Positive Pay Programs  
Positive pay programs are a fee service offered by some banks. The customer transmits an electronic check register each day to their bank. The bank will then reconcile every check received against the account to the electronic register refusing payment of any check found to be discrepant.

This service protects the banks customers and keeps the bank from having to make hard decisions about how to respond to a loss suffered by one of their customers.

Imaging  
A technology on the horizon is "imaging." Simply stated, imaging is a picture of the front and back of a check. This picture is created in a digital form rather than the traditional film and paper. As a result, check images require little storage space and may be transferred electronically. This will permit banks to curtail the movement of traditional paper documents and expedite the exchange of information for account verification purposes.

Imaging will create a challenge for document security systems. Because images will be created in much the same manner as scanning or photocopying, there will be a need to create security features that will not interfere with the process. Reflective features like foils and holograms may present problems as will techniques that mask or confuse the image in any vital check information area. Copy void features will produce "void" results when imaged. Certain colors of inks visible to the human eye will not be apparent during the imaging process.

Consumer Awareness 
Document fraud is an important issue. Consumer awareness has never been higher. At the end of 1994, The American Bankers Association (ABA) published their findings on check fraud. The story was featured in many newspapers and television broadcasts. Feature stories were carried by CNN and NBC. Cover stories were spot lighted in Time magazine and U.S. News. and World Report magazine.

For American business, the topic has never been more important. The banking industry has gone public about a problem that is costing businesses millions of dollars per year. Their objective is to create public awareness and to notify customers that they may be held liable for losses not recovered by the bank. The estimates for U.S. losses beyond banking are as high as $14 Billion dollars annually. These losses do not include expenses associated with investigation, litigation or lost customers.

F.S.A. Guidelines  
The Financial Stationers Association, or F. S. A. is a group of consumer check printers doing business in the United States and Canada. In 1995, the association chartered a task force to build public awareness of the growing check fraud problem. The reason for this desired awareness was, and is to preserve the check as a viable instrument for the transfer of value.

The task force delivered a set of guidelines to be adopted by the members at large as minimum standards for security features on consumer checks. These features included a micro printed signature line, identified with a "MP" designation, a light screen on the reverse and a padlock icon on the face (to the right of "dollars"). The padlock icon would direct the recipient to see the reverse of the check where security features could be listed. The padlock icon was used instead of a warning band.

In longer term, it is hoped that all checks will possess security features and that consumers will come to understand how to inspect and authenticate the document as "real". This will extend the life of checks as a way to transfer value.

Forms Industry Issues 
The forms industry is maturing at a rapid pace. Participants will expand their businesses into new products or markets previously ignored, to replace declining revenues lost to alternative technologies or competitive pressures. This is evident by companies expanding into commercial printing, pressure sensitive labels, or advertising specialties to name a few. Secure document programs represent a product based opportunity for value added relationships and increased revenue.

There are several requirements for successful participation in the secure document business. They include but are not limited to such areas as education, marketing and adherence to some practical standards of performance. We will assume that you are pursuing educational needs by your use of this document.

Standards of performance for secure documents are those things your customers may never ask you about unless there is a problem. Sadly, when they ask, it may be a signal that the business is lost. Secure documents are, by their nature, confidential. Participants responsible for producing secure document are expected to protect all elements of secure documents from unauthorized access. This includes all samples, films, plates, production waste, and finished goods. Failure to protect materials from unwarranted access may constitute negligence, subjecting you to liability for loss, or at a minimum, the loss of a customer. Reasonable procedures in protecting secure documents from unauthorized access may be a marketable attribute today but will likely become a given very quickly.

As you open a discussion of secure documents with your customers you will quickly be considered an expert. They rely on you to stay in touch with the latest trends in technologies and the law, and to keep them informed. This is not a new standard that you are held accountable for, but is one that requires more focus in keeping up with the rapid pace of change in the secure documents business.

A key ingredient in building a successful secure documents business will be effective marketing. The objective should be to have your customers recognize you as a secure documents provider. There is greater need to market secure documents because the business is complex and there is a lack of knowledge on the subject.

A reasonable marketing program should contain a vehicle to communicate the aspects of your secure documents offerings to your customers. These aspects should include standard precautions, standard features, and special services that are available upon request.

Secure Document Design Concepts 
Over the many years that paper forms have been in use, people have learned those things that work well in the design and construction of a form. This is not necessarily the case in secure documents. There are a plethora of features that are all designed to deter specific threats. Like many security systems, the key is to optimize the level of protection and to select various features that complement one another.

Layering 
Think of layering as a system of deterrents that work together to provide greater protection. The concept of layering can be illustrated by looking at home security. The first and most basic layer is that you have doors and windows on your home that close and lock. The next layer may be lighting that is set on timers or positioned to eliminate dark areas. Other layers may include dead bolt locks, security screens, bars, guard dogs, elaborate alarm systems and so on. The point is, layering should provide sufficient deterrence to cause the criminal to pass by the proposed target and go on to something that is less protected.

In document security, one would seek to combine complementary features that are in the paper, on the paper, or applied to the paper. This combination will be composed of covert (hidden) features which may be used to detect a fake, or trap the criminal in the act, or they may be overt (obvious) features which are visible and may serve to authenticate an original or cause the criminal to select an alternate target. The need to balance the ability to detect a fake and to authenticate an original is critically important. There is value in each.

Printed Security Features 
A basic consideration of secure document design may be the printing technique that is used.

Micro Printing:  
This is accomplished by producing an image that is smaller than can be read by the naked eye. Size may be about 1/100th of normal type size. While type of this size can be easily printed, it is very difficult to copy or scan. The feature is covert and may be useful to authenticate an original by using a simple magnifying glass. Micro printing may be an image or a message.

Paper Features 
Paper security features receive their classification because many are nearly impossible to produce if one is not producing the paper. Some features, like the chemical void, are actually added to surface of the paper after production by the paper producer.

Watermarks:  
True watermarks are of two principle types, and can only be produced while the paper being made and is still wet. They are pressed into the newly formed mat of fiber while it is still wet by a dandy roll. These are referred to as fourdrinier watermarks. The other type of watermark is cast into a mold creating much more intimate contact for an extended time with the fiber. The resulting mark is capable of remarkable detail and clarity. Watermarks of this nature are called cylinder mold watermarks. Each type is created on a different type of paper machine and it is common to speak of fourdrinier papers or mold papers. Watermark detail and visibility is obtained by varying the density of fibers in the sheet. This variation in density creates differences in opacity that yield the visual effect.

Watermarks are considered to be the most important security feature that has been created for document security. The security of watermarking can be explained in several ways. A watermark is very difficult to simulate (counterfeit) when it has good detail and clarity. This is accomplished by three dimensionality and tonal graduations that can be incorporated into the design. Furthermore, watermark security is greatly enhanced when the mark is recognizable by those asked to accept the document. Once a mark is recognizable, simulations become more difficult and detection can be easier.

Watermarks are very versatile in their use. They are visible in both reflected and transmitted light to the human eye.

Even though watermarks are easily visible to the human eye, they are virtually invisible to copier or scanner technologies. Reproduction by photographic or print methods produce distinctly different looking results. Simulation can be made even more difficult by creating watermarks that include light areas that graduate into shaded areas with great consistency. The more detail can be built into a watermark the more easily a counterfeit can be detected. Watermarks can be made even more secure by creating custom marks that are proprietary in nature and are strictly limited to their owner.

Chemical Sensitivity:  
Often referred to as ‘stain’ features, chemical sensitivity is a key defense in the prevention of document alteration or forgery. Chemical sensitivity is designed to provide indelible evidence of tampering attempts on documents. It is a covert feature.

Such tampering is accomplished by washing ink off the original document and replacing the information with fraudulent data. Various fluids are used to wash ink from the documents surface. The type of fluid used will depend upon the type of ink used to write the document. For example an oxidant like bleach would be used to wash a water based ink like fountain pen, from a sheet. Oil based inks might be washed off using various solvents.

There are several key considerations when selecting chemical sensitivity as a defense against fraud. Most important is to understand the various methods a criminal might use to forge the document. Second, one would want stain features that produce an indelible easily seen stain that will cause the person who is asked to accept the document to look closer.

Many marketers promote stain features, present in a sheet, by reporting the number of stains. Effective document design will layer several stain features intended to respond to various chemical families to deter the criminal from attempting to wash off a stain to remove the evidence of tampering. For example, stain features that are designed to react to solvents may include a wide array of specific solvents that are a part of the solvent family This may include mineral spirits, gasoline, toluene and alcohol. All are solvents, but are they different stains? Our position is that stain families matter and that there are four stain families that constitute the marketing phrase full chemical sensitivity. They are the oxidants, solvents, acids, and alkalines chemical families. Certain other chemical types can be added but are usually specific to unique chemicals and are less common.

Invisible Fibers:  
While invisible in ordinary light, this covert feature is most often responsive to ultra violet (black) light. When the document is placed under black light the fibers become quite visible. Like fibers that can be seen in ordinary light, invisible fibers can be added in an array of colors, lengths and densities. The inclusion of color makes simulation a much more difficult procedure. Because fibers are invisible, they are not intended to restrict photo copy replication The copy however will not contain the fibers and can be quickly detected by viewing the document in ultra violet light. Invisible fibers are a very effective layer that completes a comprehensive security system

Toner Adhesion Coatings TonerLockTM *:  
Documents that are imaged by laser can be altered by removal of the toner from the surface of the document. To increase the difficulty of such alteration, toner adhesion coatings are added to the paper to cause the sheet to be torn or damaged indicating tampering. These coatings are covert in nature and do not restrict photo copying of the document. Instant Verification Features This covert feature is designed to provide for authentication of an original document. A chemical is applied to the paper that will respond to a specific reactive ink. The ink is used in normal transactions by stamp pad or pen and creates a colored mark that authenticates the document as an original. After marking with the special ink, the absence of a color reaction would indicate that the document is a copy.