System and method for detecting cheque fraud

Abstract

A system and method for detecting cheque fraud includes a cheque scanning module and a detection module. The cheque scanning module scans cheques and matches the encoded Magnetic Ink Character Recognition (MICR) data (i.e. serial number, Customer Account Number and amount) from the scanned digital electronic images with items in an issuance database which contains client provided cheque particulars. The detection module passes the cheque images through an optical character recognition (OCR) process to read what is written on the cheque and to match results against the issuance database. If the written information on the face of a cheque is unreadable or there is no match with the information in the issuance database, the detection module passes the cheque through a series of slower more precise OCR processes. Any cheques that are not successfully read and matched are highlighted as an “exception” and immediately forwarded to the client for further action.

1 . A fraud detection system for detecting whether information on a cheque has been improperly modified after the original preparation of the cheque, said system comprising: 
 (a) an issuance database for storing information associated with a cheque at the time of original preparation of the cheque;    (b) a scanner for scanning the cheque and generating a digital cheque image;    (c) a detector module comprising: 
 (i) a first optical character recognition engine coupled to the cheque scanner for recognizing characters within the cheque image and for determining whether the recognized characters match the characters associated with the cheque at the time of original preparation;  
 (ii) a second optical character recognition engine coupled to the cheque scanner for recognizing characters within the cheque image, said second engine having a higher accuracy than said first engine and being operated according to a first set of presets, and for determining whether the recognized characters match the characters associated with the cheque at the time of original preparation;  
 (iii) a third optical character recognition engine coupled to the cheque scanner for recognizing characters within the cheque image and for determining whether the recognized characters match the characters associated with the cheque at the time of original preparation, said third engine being operated according to a second set of presets;  
 (iv) a fourth optical character recognition engine coupled to the cheque scanner for recognizing characters within the cheque image, and for determining whether the recognized characters match the characters associated with the cheque at the time of original preparation, said fourth engine being adapted to enhance the resolution of the cheque image prior to reading;  
   (d) a verification module for allowing manual verfication of the cheque if matching has not occurred within any of said first, second, third and fourth engines;    (e) a reporting module coupled to the detector module for compiling particulars concerning the matching results.    
     
     
         2 . The fraud detection system of  claim 1 , wherein the information is the cheque payee.  
     
     
         3 . The fraud detection system of  claim 1 , wherein the information is the cheque serial number.  
     
     
         4 . The fraud detection system of  claim 1 , wherein the information is the cheque amount.  
     
     
         5 . The fraud detection system of  claim 2 , wherein the determination of a match in step (c)(ii) is based on a predetermined percentage of character matching.  
     
     
         6 . The fraud detection system of  claim 4 , wherein the determination of a match in step (c)(ii) is based on a character matching tolerance that corresponds to a predetermined dollar value.  
     
     
         7 . A method for detecting whether information on a cheque has been improperly modified after the original preparation of the cheque, said method comprising the steps of: 
 (a) storing information associated with a cheque at the time of original preparation of the cheque;    (b) scanning the cheque and generating a digital cheque image;    (c) detecting whether the information on a cheque matches the information associated with the cheque at the time of original preparation of the cheque by: 
 (i) applying a first stage of optical character recognition to the digital cheque image to recognize characters within the image, determining whether the recognized characters match the characters associated with the cheque at the time of original preparation, and if so identifying the cheque as having “passed” and executing step (e);  
 (ii) applying a second stage of optical character recognition to the digital cheque image wherein the recognition is more accurate then that of the first stage and where a first set of presets are used to control operation, determining whether the recognized characters match the characters associated with the cheque at the time of original preparation, and if so identifying the cheque as having “passed” and executing step (e);  
 (iii) applying a third stage of optical character recognition to the digital cheque image wherein a second set of presets are used to control operation, determining whether the recognized characters match the characters associated with the cheque at the time of original preparation, and if so identifying the cheque as having “passed” and executing step (e);  
 (iv) applying a fourth stage of optical character recognition to the digital cheque image wherein the resolution of the digital cheque image is enhanced, determining whether the recognized characters match the characters associated with the cheque at the time of original preparation, and if so identifying the cheque as having “passed” and executing step (e);  
 (v) if none of the first, second, third or fourth stages have resulted in a match, then identifying the cheque as having “failed” and executing step (d);  
   (d) verifiying whether the cheque is fraudulent; and    (e) compiling a report that includes particulars concerning the results of the detection process in step (c) and the verification process in step (d).    
     
     
         8 . The method of  claim 7 , wherein the information is the cheque payee.  
     
     
         9 . The method of  claim 7 , wherein the information is the cheque serial number.  
     
     
         10 . The method of  claim 7 , wherein the information is the cheque amount.  
     
     
         11 . The method of  claim 8 , wherein the determination of a match in step (c)(ii) is based on a predetermined percentage of character matching.  
     
     
         12 . The method of  claim 10 , wherein the determination of a match in step (c)(ii) is based on a character matching tolerance that corresponds to a predetermined dollar value.