WASHINGTON – You just have to go on the Internet and do a search for check printers to see the number of direct mail check printers there are doing business. The easy access to these printers might seem like a great convenience for consumers, but it has consequences for credit union operations and members' security. Check Payment Systems Association in Washington, D.C. has been tracking market share data for third party check printers for several years and has found it steadily rising. By the end of 2002 it reached 23%. It dipped slightly in 2003 to 22%. Although there is no shortage of third party check printers for consumers to choose from, three have the lion's share of the market – Checks Unlimited (owned by Deluxe); Checks in the Mail (owned by Clarke-American); and Custom Direct (a spin-off of a Canadian check printing company). Clarke-American's Rebecca Helterbrand, associate director of business solutions stressesd that Checks in the Mail, although owned by Clarke-American, is a separate entity from the company and "Clarke-American doesn't sell its list of clients to them." Liberty, the leading check provider for credit unions, has no direct mail check printing affiliate. CPSA used to track the usage of third party check printers semi-annually, but Executive Director Wade Delk said the association now updates its information quarterly "so it has the most current data available." Among the members of the CPSA Board are Stan Hollen, president/CEO, Liberty; Charles Korbell, president/CEO, Clarke-American; Alan Westfall, president/CEO, Checks in the Mail; Ronald Eilers, president/COO, Deluxe; and Chuck Feltz, president/CEO, Checks Unlimited. Delk offered that the increasing number of consumers ordering their checks online through third party check printers "goes to prove just how ingrained checks are in people's bill paying habits." He adds that, "Contrary to popular thought, checks are not going away. Consumers are still comfortable using them. Consumers are just looking for easier ways to use them and that includes being able to order them over the Internet." If, as Delk opines, the habit of writing checks is "ingrained" in consumers' behavior, then does it really matter where they purchase their checks? Yes, say check printing company officials Credit Union Times spoke with, and the reason goes beyond them simply having to compete with direct mail third party check printers. Ordering checks online from third party printers might provide consumers with the convenience they're looking for, the officials say, but what about security of personal information and accuracy of information? Liberty's Hollen said "one of the greatest pitfalls of using third party printers comes from members turning over information to someone they don't know or to a company that's not working through their credit union." That becomes especially critical, says Hollen, if the member decides to discontinue their checking relationship with their credit union. If that happens, the third party check provider still has the member's personal information. In addition, he said, if a member orders checks through the check printer their credit union has a relationship with and there's an error on the check, the chances are good that the check printer will make the correction at no charge. That's not the case with direct mail printers, he said. The cost for making the correction is typically passed on to the account holder. That's only if the error is visible to the account holder. What if the direct mail printer mistakenly prints an error in the MICR line with the member's account number or the credit union's routing number? Clarke-American's Helterbrand said for now, financial institutions are absorbing the cost of the errors. But that may soon change, she offered. "The average cost of a rejected check as it goes through processing is $2.50. Financial institutions are starting to ask themselves `why should we pay for this'," she says Most consumers, says Helterbrand, are looking for a way to get what they need, when they need it, and at a price they like. That's the nerve direct mail check printers appeal to, but do consumers fully understand what they're buying? It's only perceived convenience, she says. "With other check resources, standards can vary significantly," says Helterbrand. "Whatever price they pay, account holders take risks with the quality, safety and compatibility of their checks if they buy them anywhere but from their own financial institutions. That can cause problems that range from processing errors because of poor check quality to the sale of sensitive, personal account holder information to third-party marketers for a profit." What it comes down to is this, says Helterbrand: "Reduced prices aren't always the best value." She added that "when account holders understand what they have to lose if they buy checks from an unauthorized source and what they have to gain if they use the resources of their financial institution, then the choice is easy." Hollen says "it's up to credit unions" to keep the check printer the credit union has a relationship with top of mind with the member and to make it easy for the member to reorder checks. "Check printers have made it so easy for members to reorder checks using links through their credit union's Web site to the check printer," he says. "There's really no reason why members should be using third party check printers out of convenience." -

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