Security Checks vs. Positive Pay for Preventing Check Fraud

Learn about the pros and cons of security checks vs “Positive Pay” programs to help fight and prevent check fraud.

Security Checks vs Positive PayAll Relyco stock laser checks are designed with security features that prevent tampering and forgery to ensure a secure financial transaction. At the same time, many organizations rely on positive pay to help fight check fraud.

No single security method can prevent all check fraud. This section provides information about both positive pay and Relyco security features.

About Positive Pay

A service offered by financial institutions, positive pay requires verification of check number and check value before a check is processed. To do so, a business or organization electronically shares a list of all checks written with the bank. The bank verifies checks it receives against this list and clears only those checks that appear in the register. Yet even this approach has limitations.

Consider an analogy that compares two popular motor vehicle anti-theft devices: LoJack® and The Club®.

How Positive Pay Works

Think of positive pay as a LoJack® system for your business. When a thief tries to steal a car, he has no idea that it is equipped with LoJack®. The thief steals the car, and the authorities use LoJack® to track it down after the fact.

In much the same way, a thief who tries to copy or alter a check has no idea that it is “equipped” with positive pay. When the fraudulent check makes it to the bank to be cleared, it is verified against the positive pay file. If the check number and amount do not match the information on file, payment on the check is stopped.

Approximately 95 percent of all stolen cars equipped with LoJack® are recovered, compared to an overall recovery rate of just 61 percent. Still, the stolen-car owner has to undergo the initial inconvenience of a stolen vehicle, as well as the need to repair damage that may have been done by thieves prior to the vehicle’s recovery. Similarly, attempts to pass fraudulent checks from bank 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 can be cleared initially, causing issues for the account holder, even if they are not ultimately held financially responsible for the fraud.

Benefits of Physical Security Checks

Now consider physical security check features such as warning bands, copy-void pantographs and chemical reactivity that may be “built in” to your check stock. Having these security features in place 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 embedded security features will have a much more difficult time than they would with a non-secure check. For this reason, experienced thieves will often leave such secure 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 they can deter many thieves.

To Learn More

To learn more about security features from Relyco, call 1-800-777-7359 or email

Protect Against Check Fraud