March 27, 2023 A business colleague called me last week with a chilling story of someone falsifying a check on her account and getting away with thousands of dollars. Check fraud is apparently not an uncommon crime, and counterfeit and altered checks are two of the most common fraud schemes. It is only by knowing how these schemes work that you can protect yourself. In the case of a counterfeit check, the criminal creates a fake check that mimics your legitimate ones. This is sometimes made possible by intercepting an outgoing check that shows the account and routing numbers, and an authorized signature. Scammers can also alter the legitimate check, changing the recipient or the amount and then cashing or depositing it. (Sometimes an unscrupulous vendor or employee assists with this, sharing the proceeds.) The best way to avoid being the victim of check fraud is to regularly check your bank account, or at least to examine your monthly statements carefully. On a personal account, you generally have 60 days from when you received a bank statement showing an error to notify your bank about the problem, according the OCC (Office of the Comptroller of the Currency). Business bank account protection, however, is governed by different rules and restrictions. Your bank probably has a special tool available to its business clients called positive pay. According to bill.com, positive pay is an automated system that compares the checks presented to the bank for payment to a list of information provided by the business about every check they’ve written. Any suspicious checks the system identifies are sent to the business for verification. Generally, banks charge businesses a fee for positive pay—although some offer it as a free service to entice new business banking clients. If you sign up for this program, you will need to send your bank a check-issue file daily showing all the checks you’ve written in the past 24 hours. The bank only clears checks that match those on the document. In reverse positive pay, the bank issues a list of check presented for payment, and only cashes them when authorized by the business. Similar procedures can be put in place to prevent fraudulent ACH (Automated Clearing House) transactions in which funds are transferred electronically. This would be a good time to have a conversation with your bank about payment fraud and how to prevent it. Hopefully you will never be the victim of this crime, or any other, but it’s wise to limit your risk whenever possible. Happy retailing, Carol “Orange” Schroeder