Check Positive Pay: A Critical Tool for Fraud Prevention

Check Positive Pay: A Critical Tool for Fraud Prevention
A Testimonial from Lamp Rynearson

Authors:
Erin Barton,  Director, Commercial Payments Advisor
Jared Sorenson, Senior Advisor, Commercial Banking

No company wants or plans to be the victim of payment fraud, but the likelihood of it happening continues to rise, especially if your business still uses checks. According to the 2024 AFP Payments Fraud and Control Survey,  65% of respondents reported they have faced check fraud attacks.

Detecting fraudulent activity early can make all the difference. If your business can spot deception when a bad actor initiates it, the fraudulent activity can often be stopped before a monetary loss occurs.

That’s where tools like Check Positive Pay and ACH Positive Pay come into play. Both flag suspicious behavior and give your business the opportunity to scrutinize and act on payment activities that raise red flags.

The team at Lamp Rynearson, a civil engineering company with three offices across Nebraska, Colorado and the Kansas City area, recently benefited from using Check Positive Pay. A check the firm issued was intercepted, altered and presented for payment. Fortunately, FNBO’s Check Positive Pay system flagged the irregularities before any loss could occur.

With Check Positive Pay, your bank matches the check number, issue date, dollar amount and payee information, when applicable, for each check presented for payment against a list submitted by your company to the Fraud Prevention portal within online banking. If a check doesn’t match, the bank notifies you to advise on whether to pay or reject the check.

"We had a check stopped – someone altered the check, and there were clear differences in the font," said Robin Matthes, Chief Financial Officer at Lamp Rynearson. "We hadn’t processed that check number yet, but the signatures were accurate. The system worked, and we are thankful."

The Importance of Being Proactive

Lamp Rynearson has experienced extraordinarily little fraud over the years but recognizes that as technology advances, vulnerability increases. With increasing pressure for faster payments, businesses face higher risks of being targeted by cybercriminals and check fraudsters.

While an $8,000 fraud attempt may not seem catastrophic in the grand scheme of things, the time, energy and effort the company would have spent trying to recover the money would have been significant, Matthes said.

Once hit with fraud, a business must contact its bank, file police reports, document the incident and reissue the check. However, the process doesn’t end there. Resolving check fraud can take as long as 180 days, depending on the bank of first deposit (BOFD) and the complexity of the fraud case. This delay not only ties up financial resources but also creates operational challenges. A business may face disruption in cash flow, which could affect payroll, vendor payments, and daily operations. The process involves significant effort in gathering documentation, working with law enforcement and possibly implementing new fraud prevention measures, further adding to the cost in time, labor and financial strain.

And despite the buzz in consumer circles that checks may soon become obsolete, the outlook is different for businesses, where checks are likely to remain part of the commercial payment process. In fact, 70% of organizations currently using checks say they don’t plan to stop using them within the next two years.

There is a level of comfort with checks, especially for one-time clients. But there is risk associated with checks because sensitive information—account number, routing number, etc.—is printed right on the checks, making it susceptible to fraud if intercepted.

Lamp Rynearson processes 110-130 checks a month and implemented Check Positive Pay a few years ago based on FNBO’s recommendation.

"We upload our check data to the portal, and if something doesn’t match, we get an exception notice," Matthes said. "We have until 3 p.m. to approve or return the check."

Despite initial concerns about adding an extra daily task, creating and uploading the check list doesn’t take much time and has become a routine part of the company’s accounts payable processes.

The Value of Check Positive Pay

For Lamp Rynearson, Check Positive Pay has proven to be a valuable investment in fraud prevention. It has not only saved them from potential financial loss but also reinforced their internal processes for tighter security. The firm strengthened internal controls by reviewing procedures, implementing dual controls and setting appropriate vendor limits. These additional measures, coupled with FNBO’s services, have reinforced their fraud prevention efforts.

"We have a very comfortable relationship with FNBO," Matthes said. "They are incredibly responsive and always quick to reply to my emails, providing the support we need right away. Relationships are so important. I like being able to pick up the phone and having that local connection.”

At the end of the day, Check Positive Pay provides control, comfort and security because we have a process in place, Matthes said. Fraud is an ever-evolving risk, and businesses must stay ahead of it.

"Check Positive Pay is a product everyone should have," she added.

If you're looking for a solution to help protect your business from check fraud, learn more about FNBO’s Check Positive Pay or connect with an expert.

About the Authors
Erin’s work is all about optimizing business payment solutions. Focused on boosting an organization’s performance, she works with her clients individually to maximize efficiencies across day-to-day cash management operations.

Jared works with businesses of all sizes in the commercial sector. Focused on boosting an organization’s performance, he works with his clients individually to maximize their banking relationship to the fullest. He enjoys getting to know his customers and building long-lasting relationships.