According to stopcheckfraud.com: “71% of organizations experienced attempted or actual payments fraud in 2010.” Because of this statistic, and many similar statistics, The McGovern Consulting Group has been working hard to develop a Fraud Protection Plan for nonprofit clients, by developing an application called the Positive Pay Tool.

1. Positive Pay Tool for Sage 100 Fund
Accounting (Formally MIP)
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2. Agenda
● Introduction
● Where is Fraud Happening?
● Check Fraud Statistics
● Types of Check Fraud
● Options of Preventing Check Fraud
● Positive Pay for Sage 100 Fund Accounting Features
and Benefits
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3. Where Is Fraud Happening?
● Survey participants identified signature debit card
fraud, customer victimization scams, and fraudulent
check deposits as the top three threats against banks'
deposit accounts in the next 12 months.
● Industry check-related losses
amounted to an estimated
$893 million in 2010, down
slightly from the estimated
$1.024 billion in 2008. The
number of fraud cases also
decreased.
Source: American Bankers Association http://www.aba.
com/Surveys+and+Statistics/2011DepositAccount.htm
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4. Where Is Fraud Happening?
● Industry losses from debit card fraud—POS
signature, POS PIN, and ATM transactions
combined—reached an estimated $955
million in 2010, an increase from $788
million in 2008.
● More than 7 in 10 banks (73 percent) reported having check fraud
losses in 2010. Over 9 in 10 banks (96 percent) reported having
debit card fraud losses in 2010.
Source: American Bankers Association http://www.aba.com/Surveys+and+Statistics/2011DepositAccount.htm
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5. Industry Statistics Review
Among the most widely used
techniques to commit payments
fraud were counterfeit checks
using the organization’s MICR line
data (68 percent), alteration of
payee names on checks issued
by the organization (56 percent),
and alteration of dollar amount on
checks issued (35 percent).
Source: http://www.stopcheckfraud.com/statistics.html
71% of organizations experienced attempted or actual payments fraud in
2010.
Checks were the payment format most frequently targeted for fraud, with
93% of attacked organizations reporting that their checks were involved.
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6. Industry Statistics Review
● Checks were the payment method subject to the greatest financial
loss resulting from fraud in 2010 for surveyed organizations. Fourteen
percent of organizations that were victims of at least one attempt of
check fraud during 2010 suffered a financial loss resulting from the
fraud.
● Checks are still the most widely used payment instrument for B2B
payments.
Source: http://www.stopcheckfraud.com/statistics.html
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7. Types of Check Fraud
● Businesses remain the primary
targets of check fraud professionals
- especially by organized rings of
criminals. In terms of counterfeiting
and alteration, payroll checks and
accounts payable checks are big
targets. Counterfeiting/duplication,
alteration, forgery, paperhanging,
and check kiting are some of the
more popular forms of check fraud
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8. Liability and Compliance
● Unfortunately, check fraud is a relatively low-risk crime that goes
unreported or unprosecuted much of the time. Because of
demands on law enforcement, prosecutors fail to pursue 75% of
bank check fraud cases. And according to the U.S. General
Accounting Office, in major cities
where there is greater emphasis
on using resources to prosecute
violent crime, the number often
exceeds 90%.
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9. Positive Pay Is a Way To
Successfully Combat Check Fraud
Banks and large businesses are protecting themselves and are
promoting a technique called positive pay as a method of fighting
check fraud artists.
Generally speaking, positive pay works like this:
1. Using accounting and database software, a company regularly sends
its bank a positive pay file that lists all the checks written against that
company's account(s). That file includes a record of each check's issue
date, amount, check number/account and payee name.
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10. Continued..
2. When a check reaches the bank
for payment, the bank compares the
check against the positive pay file.
Any discrepancies in a check's
information trigger a flag that the
check in question may have been
altered.
3. The bank notifies its corporate
customer that the discrepancy has
been noted and asks the company to
verify the authenticity of that check.
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11. The Positive Pay/Check Clearing
Process
● The issuing company (maker) sends checks to its suppliers and
transmits an electronic positive pay file to its bank (paying bank). The
positive pay file sent to the paying bank must include records of all
checks written and must be regularly transmitted to effectively detect
potential fraud.
● Since checks are paper-based documents, they are inherently subject
to theft, forgery and alteration, from both internal and external sources.
The recipients of the checks deposit those checks with their respective
banks (depository bank), which then submit them for payment to the
paying bank. If the paying bank finds that a check does not match the
electronic file previously received from the issuing company, the paying
bank notifies the company of the discrepancy.
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12. The Positive Pay/Check Clearing
Process
To find out more about The Positive Pay Tool
contact us today!
www.mcgoverncg.com
888-876-1544 | info@mcgoverncg.com