PREVENTING FRAUD

Here is a real life example of a recent fraud attempt. The payee name and dollar amount of a check issued by one of our clients were changed in an attempt to defraud the business. The change was from $120.00 to over $9,000.00

This theft was prevented by using features available from most banks. While the details may be slightly different from bank to bank, the essence is much the same. We urge all of our clients who are not already using the feature described below to discuss it with your bank. It is a very important tool to prevent significant losses from fraud from happening to your business.

The client uses 'Positive pay E' for its banking. It provides an electronic file to the bank that details the check number, date issued, amount, and payee. The bank compares any check presented for payment against this electronic file. If any of the information on the check presented differs from the electronic file, a notification is sent to the client to review.

The client can approve the payment (if for example, the payee name differs because the name on the check was truncated in a manner different from how it shows up in the electronic file) OR the client can reject the payment, which is what happened in this case. Being able to reject the payment BEFORE the money comes out of your bank account is significantly better than trying to recover the funds after the fact.

Of course, this is just one tool to help prevent fraud. Contact Duane B. Schlereth for more information on what you can do to prevent fraud in your business.

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