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Check Fraud FAQ
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“My company uses Positive Pay, so why do my
checks
need security features?”
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The best way
we’ve found to explain the difference between
check security features and Positive Pay - and
the importance of having both - is to draw an
analogy to two popular vehicle anti-theft
devices: LoJack® and The Club®.
Think of Positive Pay as a LoJack® system for
your checks. When trying to steal a car, a thief
has no idea that it is equipped with LoJack®. They steal the car, and authorities use LoJack®
to track it down after the fact. In much the
same way, a thief who tries to copy or alter
your check has no idea that it is “equipped”
with Positive Pay. When they bring the
fraudulent check to the bank, it is verified
against the Positive Pay file, and if the check
number and amount do not match the information
on the file, the check is stopped.
Approximately 95% of all stolen cars equipped
with LoJack® are recovered, compared to an
overall recovery rate of just 61%.** Still,
there is the initial inconvenience of having had
your car stolen, not to mention any damage that
may have been done by the thieves prior to the
vehicle’s recovery. Similarly, attempts to pass
fraudulent checks from accounts protected by
Positive Pay are much more likely to be detected
at the bank, but the system is still far from
foolproof. For example, many Positive Pay
programs do not look at the Payee Name, meaning
that the name on the check can often be altered
without being detected. Also, a fraudulent check
that is cashed at a bank other than the one on
which it is drawn will still go through, causing
at very least a headache for the account holder,
even if they are not ultimately held financially
responsible for the fraud.
Now consider physical security features – such
as warning bands, copy-void pantographs, and
chemical reactivity - actually built into your
check stock. Having these security features is
akin to putting The Club® on the steering wheel
of your car, in that they act as a deterrent to
attempts at fraud. A thief who tries to alter or
duplicate a check that has security features on
it will have a much more difficult time of it
than they would with a non-secure check. For
this reason, experienced thieves will often
leave such checks alone, targeting those that
are more vulnerable due to a lack of security
features.
Just as a thief can still steal a car that is
equipped with The Club®, they can also copy,
forge or alter a check that has security
features. However, vehicles equipped with The
Club® are four times less likely to be stolen
than those without it. Like The Club®, no
document security feature can prevent all check
fraud, but the fact that they deter many thieves
is inarguable.
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Document Security
Features
"The Club" for your Check Stock |
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**
http://www.getfacts.org/prevention.html
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Corporate Headquarters
100 Main Street, Ste 222 - Dover, NH 03820
Tel: (800) 777-7359 - (603) 742-0999 - Fax: (603) 742-9993 |
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