AUTOMATED READERS STRENGTHEN FOOD LION HAND VS. BAD CHECKS

CHRIS O'LEARY

SALISBURY, N.C. -- Food Lion here hopes to get a stronger grip on check fraud by rolling out automated check readers chainwide by the third quarter of fiscal 1996.

The retailer is equipping stores with magnetic ink character readers that scan checks at the point of sale and verify them against a corporate-level data base. Food Lion considers the system an improvement on its previous method of requiring cashiers to request and manually enter customer identification at the register at each shopping trip.

Customers now only need to present identification once, and the MICR number on their checks is scanned into a file in Food Lion's corporate data base. All future checks are verified against this data base.

Linking this positive file of customers with its existing "negative" data base of check offenders will add another dimension to Food Lion's efforts to control check-related shrink, said Ames Flynn, director of systems services.

"The system will give us better control on check loss by developing a positive file," he said.

After deciding to move to automated check approval, the retailer initially tested a number of systems, including optical readers that scan the shape of the MICR numbers rather than read the MICR characters.

Food Lion said it decided to go with an automated MICR

system because it verifies checks in the least amount of time and is most likely to be able to detect counterfeit checks.

The retailer hopes enhanced cashier throughput will be one benefit of moving to automated check readers. "We no longer need the driver's license [for identification] and we don't have to key in the check number," at the POS, Flynn said.

While no longer requiring identification at the POS does speed up cashier time, it could also encourage criminals to steal legitimate checks and try to pass them at the registers, industry sources said.

Food Lion, however, is defending against that potential for fraud with a corporate-level program that monitors customer check histories and flags suspiciously high amounts of check tenders and usage, Flynn said.

Check-related operations at the corporate level have also been enhanced, he added. For instance, when the retailer gets back a check marked for insufficient funds that has already been scanned into its system, all personal information about the checkholder is already on file.