Check fraud is on the rise in the US and around the world, and advances in technology have only added to the problem. Criminals can now create realistic counterfeit checks as well as false identification that can be used to defraud institutions. How big is the problem? A recent US Treasury survey found that corporations, on average, lost approximately $360,000 a year to check fraud.
It’s Up to You
In the past, banks assumed most of the costs associated with check fraud. Now, however, the UCC code stipulates that the liability is to be shared between the bank and you—as long as both parties have fraud prevention measures in place. If the bank does and you don’t, the liability is all yours.
The best way to protect yourself is to put Positive Pay to work, and stop check fraud before funds ever change hands.
View the Positive Pay diagram below by clicking and holding your mouse on the orange slider at the bottom, and then moving it to the right. To view the diagram in a full-size, printable window, click here.
Positive Pay allows a company to work together with its financial institution to detect check fraud by identifying payments the company never issued or checks that do not exactly match those issued by the company. When checks are printed through PayPilot, a Positive Pay file is created containing bank-defined information like check number, date, amount, and payee. This file is configured to meet the bank’s format requirements and is automatically transmitted to the bank using communication facilities already built into the software.
As checks are received for payment, the bank verifies the information on each check against the Positive Pay file and pays only those with a perfect match. Checks that don’t match are rejected, and an Exception Report is sent back to the company for pay/no pay decisions.
Reverse Positive Pay
Another way to fight check fraud is to reverse the process. With Reverse Positive Pay, the company, not the bank, maintains the list of issued checks. In this case, the bank sends the company a file of all checks presented for payment, and it’s up to the company to check its Positive Pay file and determine which payments should be denied.
Positively Seamless
Regardless of which process you choose, Positive Pay is the leading method of check fraud deterrence available today. We can put this security method in place for you. As part of your PayPilot implementation, we will customize the output file to conform to your bank’s requirements and configure all the communications for simple, seamless operation.
