Flaws of Traditional Positive Pay Highlighted in VALID Systems’ Webinar
- A Valid Systems webinar explores Fighting Check Fraud in Real Time
- Session guests include Frank McKenna (FrankonFraud), Ronald Praetsch (About Fraud), La Shonna Sharp and Nickolas Ledford (VALID)
- Positive Pay can be "supercharged" for increased effectiveness
Among those in tune with the check fraud landscape, there are some who strongly advocate Positive Pay as the solution to significantly reducing check fraud -- with a select few saying it can eliminate check fraud. And, while we advocate financial institutions' deploying Positive systems with all their corporate clients, we also understand that it has limitations and must stress that it cannot stop end check fraud alone.
This sentiment is shared by our friends at VALID Systems. Recently, they hosted a webinar entitled Fighting Check Fraud in Real Time, covering a variety of topics around check fraud.
Traditional Positive Pay NOT Enough
During the webinar, La Shonna Sharp, Chief Risk Officer at VALID Systems, offers a quick explanation on why Positive Pay -- while "a great solution" -- can't do the job on its own.
As posted in a clip on VALID System's LinkedIn:
Ms. Sharp responds to a few comments from attendees about Positive Pay as a solution for check fraud. While she acknowledges that it is indeed a powerful solution, the simple fact is that Positive only covers business/corporate accounts. The leaves a significant portion of checks not covered, from personal accounts or accounts that are not signed up.
The problem is is that when you look at positive pay, it's business bank/business accounts that leverage positive pay for payroll like ADP and things like that. That's a percentage of the check systems that are out there. Unfortunately, roughly 50 to 60% of the checks that we're seeing around fraud are in the consumer base. It's not me writing a check to Frank or me writing a check to Nick. We're not part of that positive pay solution. And that's where a lot of the fraud is is happening along with your smaller businesses that may not be using a positive pay solution...
...Unfortunately, the fraudsters have picked up on that and they're moving more into that consumer and small business banking solutions.
Transforming Positive Pay
One major topic we've covered recently is how traditional Positive Pay systems are being "supercharged" to address legacy system flaws. Because Positive Pay only applies to business/corporate accounts, it will never be an all-encompassing answer to check fraud. However, there are ways to improve the solution to become a stronger check fraud detection component.
This includes:
- Verification and validation of the payee
- Validating additional fields of the check like signature, date, and payor
- Incorporating consortium data
- Deploying dark web monitoring to identified stolen checks or compromised accounts
This very subject will be addressed on September 16-17, 2025, at our in-person Check Fraud Roundtable in Mclean, VA. Fraud experts will collaborate as part of the "Positive Pay Workgroup" to identify weaknesses and set goals for improving legacy systems. If you'd like to take part of the discussion, please register with the form below.