Paper-based fraud is a crime of opportunity that can be prevented through the use of anti-fraud services and by implementing tight internal controls. A 2009 reports reveal over $15 billion in payment losses and 71% of the businesses surveyed experienced attempted or actual fraud. Check fraud is growing rapidly and affects companies of every size and type. The following safeguards are recommended to proactively combat paper-based fraud.
Best practices for paper-based processes
- Review your banking activity on a daily basis and reconcile accounts in a timely
manner. Use an online banking service, such as Regions iTreasury, to
securely and conveniently access your account information and review check
images.
- Establish dual control for check issuance and account reconciliation tasks. Dual
control consists of the segregation of duties and is a primary internal control which
prevents or decreases the risk of errors, or irregularities, and identifies problems.
Dual control is achieved when an individual does not have control over all phases
of a transaction.
- Segregate accounts by purpose, type and/or payment method.
- Purchase check stock only from known vendors.
- Convert paper payments to electronic.
- Securely store check stock, deposit slips and bank statements.
- Implement secure destruction practices for all financial and other confidential documents that could be used to facilitate identity theft.
- Utilize Positive Pay services.
Positive Pay Services
With Positive Pay services you reduce your exposure to check fraud arising from amount-altered or counterfeit checks by comparing the checks issued by your company with the checks presented for payment against your account. Any exceptions in which the issued and paid amounts do not match are reported to you, giving you the opportunity to have Regions Bank pay or return each exception. Positive Pay Services include Next Day and Same Day Positive Pay as well as Reverse Positive Pay and Teller Line Positive Pay.
Next Day Positive Pay
This positive pay election protects against check fraud and enables you to maintain a cumulative checks-issued database on file with Regions. This file is used to verify paid checks as they are presented for payment. The checks-issued database includes information such as the account number, check number, issue date and dollar amount. Optionally, payee names may be included for digital comparison to paid checks with Regions’ Payee Name Verification service, available with both Next Day and Same Day Positive Pay. Alterations in the payee name of legitimate checks represent the oldest and most common method of check fraud.
Same Day Positive Pay
Same Day Positive Pay is a useful fraud prevention tool if you issue checks drawn on a Controlled Disbursement Account (CDA). Regions will compare the items
presented against your check issue file beginning the same business day. The issue file process is the same as that used for Next Day Positive Pay Service.
Reverse Positive Pay
If you are unable to provide Regions with a checks issued file, Reverse Positive Pay is an ideal safeguard. Each business day, Regions will provide you with a listing of items that have been presented for payment. You can then compare the information to the checks you have issued in order to identify any fraudulent items.
Teller Line Positive Pay
Teller Line Positive Pay is an added benefit to Next Day and Same Day Positive Pay. This service provides an extra level of security to reduce check fraud by allowing Regions to compare checks presented at the teller line to the checks you have actually issued. Any non-matching items presented against your account will be denied if presented at the teller window.
Electronic Payment Alternatives
Converting paper-based payments reduces your exposure to check fraud. Regions offers many ways to make electronic payments:
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Did You Know?
One of the most common forms of internal fraud is “bookkeeper fraud.” Bookkeeper fraud arises when a trusted employee has been granted full authority to issue and reconcile payments. As a result, fraud is facilitated by such full access and is often undetected for some time, even years. Bookkeeper fraud represents nearly 85% of all fraud targeting businesses and entails either paper based fraud associated with checks or confidence games such as investment schemes, sales schemes or identity theft.
In addition to instituting dual control practices, the services listed above can greatly reduce exposure to this type of fraud. Also, be aware of the following contributing factors to bookkeeper fraud:
- Requests to have blank checks signed. The check will then be converted for personal use.
- Situations where dual control is not practiced. A sole employee is responsible for all facets of bookkeeping, including check issuance and reconcilement, and handles all banking activity. Such practices represent a highly increased risk for fraudulent practices. Oftentimes, a rogue employee will open a bank account with a similar name to your business and divert checks payable from your company to the bogus account. Fraud is also perpetuated through the creation of erroneous vendors/companies to whom the criminal then issues payments.
Fraud Prevention Resources
Learn more about the best practices and other helpful tools to help protect your business from fraudulent practices.
Reporting Fraud
If you believe you are a victim of fraud or have been the recipient of a suspicious communication, call Regions Commercial Client Services immediately at 1-800-787-3905.