How Positive Pay is used to prevent check fraud

Did you know that First Utah Bank offers Positive Pay services to our Treasury Management business banking clients for no additional fees or costs? And there is a reason for that. Positive Pay is an essential tool in preventing check fraud. And check fraud has been growing. According to recent statistics, check fraud represented 66% of all payment activity fraud cases. But why has check fraud become such an intractable problem? Certainly, it has always existed, but it has been getting worse in recent years. In fact, check fraud has become so widespread that many banks are struggling to collect on bad checks from other banks.

Check fraud can be a major headache for the businesses it impacts and the banks that pay out those funds. And that is why it is incumbent on financial institutions to help their customers avoid check fraud at all costs. And one of the best ways for small businesses to prevent check fraud is by using Positive Pay. But what is Positive Pay and how can it be used to prevent check fraud?

What is Positive Pay?

As technology marches on thieves and hackers continually find inventive ways to commit fraud. It is simply a fact of modern life. That’s why as a business finds quicker ways to optimize the payment process through automation, active fraud prevention is necessary to protect the brand reputation. Your reputation could be seriously damaged if you aren’t protected from things like check fraud. Fortunately, one way businesses can protect themselves from check fraud is through a service called Positive Pay.

Positive pay is a popular automated cash service that helps banks detect fraud by matching the company’s issued check with the check presented for payment. The dollar amount, check number and account number must all match, or the check is flagged and sent back to the issuer for review. It is a very simple process that provides a quick guarantee that the check is, indeed, safe and ready to be cashed or deposited. Generally, checks that go through the Positive Pay process will have a statement on them stating the check has been cleared through Positive Pay.

Businesses and banks count on the Positive Pay system as a way to insure against losses, fraud, or other unwanted liabilities or charges. And while some banks charge for the service, First Utah Bank provides the service free to our Treasury Management clients.

How does Positive Pay Work?

Positive Pay services protect businesses by matching specific information on a check against information provided by the company prior to the check being processed. The bank will correlate the dollar amount, check number, date, account number, and payee. If any of the data does not match, the check will not be cleared. It really is as simple as that.

In the event that information does not match, the bank will then notify the business there was a problem. The bank will also withhold payment until the company advises the bank to accept or reject the transaction. The bank will likely flag the check, notify the company, and ask for permission to clear the check.

In the event there is only a slight error or minor problem, the business can advise the bank to clear the check. One thing to remember when it comes to Positive Pay is that if your company forgets to send a list of approved checks to the bank, all checks presented that should have been included may end up being rejected. It is important for cash flow reasons that companies who are signed up for Positive Pay get an approved list to the bank as soon as possible.

How you can prevent check fraud

Fake checks might look like a business or personal checks, cashier’s checks, money orders, or a check delivered electronically. There are essential ways businesses can ensure they do not become victims of fake check fraud schemes. First, never use money from a check to send gift cards, money orders, cryptocurrency, or wire money to anyone who asks you to. Throw away offers that ask you to pay for a prize or ask for personal information and never give out sensitive information to people calling you over the phone.

Here at First Utah Bank, we take our business banking clients’ security seriously. Preventing fraud and loss is critical to not just our company but to those who trust their finances with us. We offer services like Positive Pay to ensure our business banking clients in Lehi and Salt Lake City have access to additional tools to prevent fraud. And that’s why we offer it free of charge to our Treasury Management clients.

Are you a business in Salt Lake City or Lehi, Utah looking for a different banking experience? First Utah Bank offers you just that. Learn why we are Utah’s community bank!