- Some banks offer "extra protection" against fraud for a monthly fee
- Bank customers are responsible to report suspicious activity within a short period of time
- "This is not a fraud mitigation program; this is a screw the bank customer program"
Jeremy Wiswell said he and his wife, Sarah, had a check written to a vendor for $395 in September. Sarah checked their account the next morning and found that the check had been compromised and written for $27,395.
They immediately noticed how the check's border looked different, Jeremy said.
Their check fraud nightmare started the same way many others have in our area. It was stolen from a USPS mailbox they deposited it in, this time by the Central Avenue and Goddard Road intersection.
Unlike many of the check fraud schemes, this one wasn't washed. The crooks appear to have simply taken the business name, address, routing and bank account number and put it on another, separate check.
Bank's Check Fraud Protection: Flawed
As it turns out, the Wiswells actually pay a $25-per-month fee in order to get added protection called Reverse Positive Pay -- a program which gives its customers seven hours to approve checks -- utilizing a key fob, which provides a one-time authentication code -- before they're processed.
According to the victim Jeremy Wiswell:
"If you miss the opportunity to check on those checks within that seven-hour window, those checks will process...
... All it does, from what I can tell, is relieve the banks of any liability."
Unfortunately, the Wiswells "missed their window." That means - you guessed it - they lost $27,395.
This did not sit will with #FraudFighter Thomas O'Malley, as he declared that "this is not a fraud mitigation program; this is a screw the bank customer program."
While reverse positive pay provides customers the ability to reject check payments, it is not unlike traditional positive pay, which has its flaws as well.
What Banks Can Do to Protect Their Customers from Check Fraud
This is not to say that both positive pay and reverse positive do not have their place within check fraud detection strategies -- but they cannot be solely relied upon. As we've noted in the past, there is no single solution that can detect the majority of check fraud. This is why banks need to take a multi-layered approach, deploying a multitude of technologies to detect check fraud including:
- Image Forensic AI to analyze the the images of newly deposited items for indicators of counterfeits, forgeries, and alterations.
- Behavioral Analytics to monitor transactions and account behavior for anomalous behavior.
- Positive pay to match check payments with the issues file to ensure payment integrity.
- Consortium Data to compare transactional data and image metadata from other FIs.
- Dark Web Monitoring to scan the "clandestine internet" and encrypted messages apps like Telegram for account holder information and check images that are being sold.
The key to stopping fraudsters is deployment of these high-tech solutions to ensure that fraudulent checks are detected before any losses are taken.