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Positive pay provides and recipient name. This can be financially devastating for
consumers or small businesses owners and can diminish
a way to combat the credibility of FIs that fail to address the issue.

Fraudsters have also moved to sophisticated means such
check fraud as graphic design to make copycat checks for use in future
schemes or sell them to third-party entities on the dark
web or through encrypted social media platforms like
Telegram. A simple way to combat check fraud is to use
indelible gel black ink pens that are more resistant to
check washing techniques. FIs should also bolster their
internal controls and partner with third-party firms that
mine the dark web for account information associated
with their institution to proactively place stops and holds
on compromised accounts.
Banks offer Positive Pay to stem fraudulent activity
By Todd Robertson Although the banking and payments industries have
ARGO transitioned to digital, 81 percent of businesses use paper
checks daily. To better protect these businesses, FIs should
espite the banking and payments indus- proactively offer positive pay services. Positive pay places
tries making the jump to digital, check fraud the responsibility for fraud mitigation on businesses, while
remains a serious threat. While check usage enabling FIs to better detect fraud on a business account.
D has declined in the United States, check fraud Altering a payee's name on a known, good check is a
has surged over the past few years, being the most com- technique often used to defraud organizations. While the
mon form of crime committed in the country with banks dollar amount, check number and other details are being
experiencing more than $24 billion in fraud losses. verified, payee positive pay verifies the payee's name
printed on the face of the check and automatically scans,
Last year, a spike in mail theft-related check fraud reads and matches against the payee information in the
prompted the Financial Crimes Enforcement Network issued-check file.
in collaboration with the United States Postal Service to
issue a nationwide alert imploring financial institutions Traditional positive pay enables check fraud protection
(FIs) and consumers to remain vigilant for potential check by positively matching and validating dollar amounts
fraud. In 2022, suspicious activity reports related to check and serial numbers against information from issued-
fraud reached over 680,000, doubling from 2021 (see https:// check files. In addition to the baseline service, banks offer
tinyurl.com/3e7f66jf). several types of positive pay. Reverse positive pay presents
all paid items to the corporate customer for self-service
Blue USPS mail collection boxes have become a primary review. Positive pay ACH enables customers to create
target for criminals to steal personal checks, business ACH debit blocks and debit filters, which the solution uses
checks and Social Security payments. A large portion of to evaluate ACH transactions. The solution also allows
the 25,000 mail theft incidents came from those boxes last customers to add or remove ACH vendors or items in real
year. In response the postal service upgraded thousands time. The ACH solution also processes converted checks
of blue boxes with more robust defenses, including dual- against the original issue information, generating alerts
factor lock access and a revised chute that combats fishing for altered, mismatched or duplicated items.
devices (see https://tinyurl.com/385yzd89).
Despite most FIs charging businesses for positive pay
Small businesses at a heightened risk of check fraud services, the benefits justify the price tag. Positive pay
Small businesses make up a sizable portion of those allows institutions to protect themselves and businesses
impacted by check fraud, with a report finding that against fraudulent checks and electronic transactions.
around 31 percent of small businesses have experienced Additionally, positive pay cuts down on costs and time
check fraud in 2023, with 65 percent reporting losses required to evaluate potentially fraudulent checks. Check
exceeding $50,000. Small businesses are the lifeblood of the fraud is not going away soon, necessitating the need for
U.S. economy and comprise 99.9 percent of all American financial institutions to offer solutions that protect their
businesses, making it critical for FIs and businesses to take small business customers.
necessary steps to detect and mitigate fraud (see https://
tinyurl.com/3kx3rnkp). Todd Robertson is senior vice president of business development for
ARGO. Contact him via LinkedIn at linkedin.com/in/todd-robertson-
Criminals often "wash" stolen checks with chemicals to 038b475.
remove ink from a check and change the dollar amount
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