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Low Tech Fraud – High Tech Fraud: Embezzlement, Mobile Banking Fraud,
and Holder in Due Course
Greg Litster
President
SAFEChecks
Dr. Kasthuri Henry, PhD, CTP, Six Sigma Black Belt
Corp. Director of Financial Process & Interim Treasurer
Berkshire Hathaway, Duracell
What is Embezzlement?
• A perpetrator takes or uses a company’s money without consent.
• May happen all at once or bit by bit
• Can include falsified records and moving funds from account to account
• Often goes for years without detection2
Copyrighted Material © ALL Rights Reserved by KasHenry Inc.
6 TPYES OF EMBEZZLEMENT
6 Major Types
Siphoning
Check Kiting
Lapping
Payroll
Kickbacks
Overtime
3
Copyrighted Material © ALL Rights Reserved by KasHenry Inc.
This is accomplished by the people working on the front line in stores or
restaurants. They devise a way to pocket money from the register without
creating discrepancies between what the computer shows and what the drawer
shows.
Accomplished by making a series of deposits and
withdrawals between several banks, taking
advantage of “float” which is the amount of time it
takes for deposited checks to clear their home banks.
A person that handles the bill paying function at a
corporation would be able to do this crime by using
company checkbook to get the scam started and
progress it until the banks realize what is happening.
Accomplished by accepting incoming payments from
customers or vendors. A person working in this capacity for
a church, for example, could use bank deposits for several
companies and change the allocation of the funds to cover
up their own personal taking of certain cash payments from
certain customers. This accumulation of funds obtained
while in a trusted position of fiduciary responsibility would
quality as a money laundering crime.
This is accomplished by using the company payroll in order to illegally take
money by adding some family member who is not employed with the company,
maybe spouse and/or kids, and have them drawing income against the
company. At home, the employee would be able to cash each of the checks,
increasing their level of income..
Any people involved in purchasing activities in any
organization could be prospective embezzlers
through kickbacks. This involves a vendor, from
whom the company purchases materials in their
course of business, agrees to give that employee
money, directly to them, if they continue to buy a
certain product from that vendor. Often times these
situations involve inflated prices, since the vendor
agent is possibly trying to make some personal
profit as well.
Another way that people can commit embezzlement is through the
falsification of overtime records. An hourly-paid manager for the local
branch office of the bank could do this.
6 TYPES OF EMBEZZLEMENT:
Siphoning
Check Kiting
Lapping
Payroll
Kickbacks
Overtime
Embezzlers
Embezzlers
Embezzlement happens
In the presense of The “Fraud Triangle”
• Motive
• Opportunity
• Rationalization
Mitigation is
• Effective controls
Copyrighted Material © ALL Rights Reserved by KasHenry Inc.
Preventing & Handling Embezzlement
Common Sources of Embezzlement:
Controls to prevent embezzlement:➢ Ensure the employees are not having bills or invoices rerouted to a personal
residence or private mail box
➢ Look for delinquent taxes notifications
➢ Look for cash reserves slowly depleting, and identify root causes
➢ Perform Random Surprise Audits
8
Copyrighted Material © ALL Rights Reserved by KasHenry Inc.
Payroll Procurement T & E
Preventing & Handling Embezzlement
Controls to prevent embezzlement:
➢Segregation of Duties
➢Vendor and Employee Set-up separate from Vendor Payables
➢Payroll totally separate from cash reconciliation
➢Vendor and Employee Hiring Procedures and Documentations to meet various Vendor and EEOC Regulations
➢Zero tolerance on no-bid contracts
➢Effective Internal Controls for Payroll, Procurement and T&E
9
Copyrighted Material © ALL Rights Reserved by KasHenry Inc.
Preventing & Handling Embezzlement
Employers best practice to handle embezzlement:
➢Contact a lawyer as soon as possible
➢Do not question employees or take other actions without lawyer’s advice
What are your thoughts on companies not taking action
to protect their brand?
10
Copyrighted Material © ALL Rights Reserved by KasHenry Inc.
Resources
Embezzlement Schemes differ across industries and by
company size. Study these Resources for details about your
organization:
2017 Hiscox Embezzlement Study (also see prior years)
Association of Certified Fraud Examiners
“Report to the Nations” 2010 – 2016
Marquet Report on Embezzlement (2008 – 2015)
Frank Abagnale Fraud Bulletin, Volume 15
(also see prior Volumes)
Embezzlement happens:
• In every industry and department
• At every level of employee
Highlights
• Small businesses (<500 employees) suffer relatively higher embezzlement costs than large firms
• More women embezzle than men (51% v 49%)
• Men cause significantly higher embezzlement losses
Highlights
• 37% of cases had losses > $500,000.
• 23% had losses > $1 million.
• 55% of companies had <100 employees
• 68% of companies had <500 employees
Highlights
• 29% of schemes lasted > five years
• Longest scheme lasted 41 years
Highlights
Profile of an Embezzler
1. No single set of characteristics
2. Corroborating circumstances and “Red Flags”
3. They must:
a. Hold a position of confidence within the organization
b. Be able to recognize an opportunity for fraud
c. Possess the technical skills necessary for theft
4. Ability to rationalize stealing company funds
Profile of an Embezzler
Median Age: 48
Position Held: Finance/Accounting = 68%
Lone Perpetrator = 85%
Conspiracy = 15%
96% of perpetrators had never been charged
or convicted of a fraud-related offense
Do background checks, but over-reliance on background
investigations is unwise.
Many companies don’t press charges!
Profile of an Embezzler
Embezzlement Reasons
• Nicer Lifestyle
• Gambling
• False sense of “entitlement”
• Substance abuse
• Support a personal business
• Support “Significant Other”
Nicer Lifestyle and Gambling
dwarfed all other motivations
65% 27%
Embezzlement Reasons
The “tone” set by upper management significantly
contributes to embezzlement –
• Unethical behavior/attitudes
• Overriding established safeguards
• Pressuring employees with unrealistic goals.
Embezzlement Reasons
Red Flags
Extravagance Lifestyle out of proportion to salary
“Eager Beaver” Comes in early, leaves late, never takes
vacation
Disgruntled Feels unfairly treated, steals to ‘even the
score’
Egotistical risk-taker Rule-breaker in-and-out of work life
Embezzlement Cases
Jose Urrutia, Orange County, CA September 2018
Volunteer Treasurer – Junior United Soccer Association (Anaheim)
Volunteer Treasurer – International Seafarers Center (Long Beach)
Port of Long Beach, Finance Department, CPA
Patricia Cascione, So. California September 2018
Treasurer for multiple Girl Scout troops
Former CFO of the Beverly Hills Cancer Center
Embezzlement via “shell” vendors
Anita Collins, 67, Charged With Stealing $1 Million From NY Archdiocese
Embezzlement via “shell” vendors
NEW YORK A 67-year-old woman with a criminal record for theft has been charged with siphoning $1 million in
donations while working in a finance office of the Roman Catholic Archdiocese of New York. (January 30, 2012)
The archdiocese said it did not conduct a criminal background check when Anita Collins was hired in 2003. Church
officials were unaware that she had been convicted of grand larceny in one case and pleaded guilty to a
misdemeanor in another.
Over seven years Collins sent fake invoices to the archdiocese, then issued 450 checks
on accounts she controlled, all in amounts under the $2,500 threshold that would have
required a supervisor's approval.
Maria Louisa Mason, 80, a retired state employee, has been charged with embezzling $73,000 in public money intended to build a statue in honor of Cesar Chavez.
School employee accused of embezzling $200,000
MUSKEGON, MI -- A long-time school bookkeeper is accused of stealing $208,000 from Western Michigan Christian High School.
Rev. Jonathan Wehrle, the founding pastor of St. Martha's Church
in Okemos, is accused of stealing $5 million from the church.
Rita CrundwellDixon, Ilinois City Comptroller
Rita Crundwell
Embezzled $53 million in public funds over 22 years
Rita Crundwell
Used the money to breed horses; had a $400K RV
Rita Crundwell
Sentence: 17 years
Embezzlement via Bogus Vendors
(no Separation of Duties)
Texas: Small Company - $2.4 million over 6 years
Used QuickBooks and hand-written checks
Trusted bookkeeper of 13 years embezzled $2.4 million.
Issued & signed checks, reconciled accounts
Bogus payees, incomplete endorsement
Company sued the Bank of First Deposit
(BOFD)
Who won Lawsuit?
The Bank!
How?
Why?
UCC: One-Year Statute of Limitations!
After one year, the bank has NO LIABILITY even if
the bank was negligent in the transaction
Santa Monica’s Big Blue Bus
$1,075,000
Embezzlement via Diverted Deposits
Actual Big Blue Bus Check stolen from mail
Big Blue Bus
• Federal Transportation money ► FBI, Secret Service
• Check believed stolen by a Nigerian temporary employee
• Nigerian temp quit when FBI began interviews
…but his picture was discovered in FBI files
• Check was NOT Altered – Endorsement was forged
• Forged endorsements are liability of BOFD for 3 years
Prevent Embezzlement via Diverted Deposits
Use your Bank’s Lockbox Service
Uniform Commercial Code (UCC)
• The risk of loss for fraudulent endorsements by
employees…fall[s] on the employer…if the bank was
not negligent in the transaction.
“Reasonable Employee Rule””
Embezzlement Prevention
Tools and Strategies
Anonymous Tips
#1 means to discover embezzlment
Embezzlement Prevention Tools and Strategies
Tip Hotline is the most effective tool to detect embezzlement
Tip Hotline accessible by:
1. Employees
2. Vendors
3. Customers
4. Outsiders
Mobile Banking Fraud
MOBILE BANKING FRAUD
46
Copyrighted Material © ALL Rights Reserved by KasHenry Inc.
BALANCING ERM ACROSS THE ORGANIZATIONMakomaski J and Vance B, 2007, p. 10
Enterprise Risk Management for Dummies, written under the auspices by Risk and Insurance
Management Society, Inc.
Cross Functional and Emerging View of Risks
Legal Financial Business/ Operational Safety/ Audit
Strategy Security
• Civil • Fuel • Brand • Technology • Safety • Fraud
• Criminal • Interest • Reputation • Info Security • Environment • Disclosure
• Regulatory • ForEx • Service • e-Business • Emp. Safety • Process Risks
• Contractual • Insurance/ • Alliances • Continuity • Security • Fin. Controls Financing
• Expansion • Revenue
Functional Risk View
Many companies have deep functional risk identification and management;
the challenge is to address cross functional and forward looking “horizon” risks.
47
Copyrighted Material © ALL Rights Reserved by KasHenry Inc.
Always Asking “Are we there yet”?
Yes
Keep doing what is
working
No
Do you want to
improve
results?Yes
No
Change
Something
Are you satisfied
with the results?
48
Copyrighted Material © ALL Rights Reserved by KasHenry Inc.
Mobile Banking and Deposit Fraud –
the newest twist on check fraud
72% of all fraud cases involving mobile banking apps included mobile Remote Deposit Capture (mRDC).
mRDC fraud is the latest example of fraudsters merging the old and the new – classic social engineering and check fraud over modern banking channels and technology.
Guardian Analytics Mobile Fraud Trends Report, April 2016
Mobile Banking Fraud:
Double Deposits
Mobile Banking Deposit Fraud
Scenario: A check is mailed to Dishonest Don
• Don uses a smart phone app to deposit check
Takes pix of front of check
Endorses the back of a different check
Uploads check; is pays at drawer’s bank
Mobile Banking Deposit Fraud
Later, Don cashes the same check at a check cashing
store
▪ 2nd check hits the drawer’s bank account
(check is presented for payment twice)
Scenario: A title insurance company gives John Doe a
check at closing. John Doe deposits the check via a
mobile app...
...then comes back to office and returns the check,
asking that it be made payable to John Doe or Jane Doe.
Mobile Banking Fraud: Another variation…
The company doesn’t think to place a
Stop Payment on the first check
because they have the check in hand!
1. If a physical check is returned for a replacement,
place a stop payment on the returned check. It may
have been deposited remotely.
2. Recipient MUST sign an affidavit stating the check
was not “deposited.”
3. An Affidavit does not provide protection, only a right
to sue and collect legal fees.
Who Takes The Loss
on Double Deposits??
The answer is found in the Rules governing
Check 21
AND
The Uniform Commercial Code (UCC):
Holder In Due Course
1. Mobile depositing is another form of Remote Deposit Capture
2. Remote Deposit Capture is part of Check 21
3. Check 21 has specific rules that govern Remote Deposit
Capture (including mRDC)
4. The Rules determine who takes the loss
Mobile Banking & Check 21
Check 21 Rules
Two Warranties:
▪ Image of check is clean; everything is legible; substitute check is properly created
▪ Check is presented for payment only one time; no double presentments.
The Fed did not envision Remote Deposit Capture desktop scanners or mobile banking smart phone apps in 2004 –yet the rules are still relevant and applicable!
Bank of First Deposit (BOFD) can charge the loss
against its customer’s account.
Liability for the loss falls on the bank that allowed its
customer to use the smart phone app.
Under the § 229.56 Warranty…
Warranty Claims
A Breach of Warranty claim can be filed within
one year from the cause of action.
➢ Cause of action begins to run the date the injured party first learns of the loss.
➢ Claims must be made within 30 days after the person has reason to know or further losses cannot be claimed.
➢ Comparative negligence applies.
Holder In Due Course
FraudTips.net
Holder In Due Course
➢An innocent party who accepts a check for goods or services
➢No evidence of alteration or forgery, or knowledge of fraud by
recipient
➢ Statute of Limitations
✓ 10 years from issue date
✓ Three (3) years from date of return
➢ A Holder In Due Course can sell his/her rights
➢Trumps Stop Payments
➢Trumps Positive Pay
Trump (n.) To get the better of an adversary or
competitor by using a crucial, often hidden resource.
Holder In Due Course
Holder In Due Course
Federal Appellate Court
Lawsuits
Robert Triffin v. Cigna Insurance
• Two year old check; payment stopped
• No “expiration date” printed on check
UCC: Check valid for 10 years or 3 years
• Print on checks: “This check expires and is void 25
days from issue date”
✓ Don’t re-issue check until first check expires
http://www.jurispro.com/files/documents/doc-1066206627-article-2071.pdf
http://caselaw.findlaw.com/nj-superior-court-appellate-division/1093442.html
Holder In Due Course
Print a SHORT expiration date on face of check:
“This check expires and is void 25 days from Issue Date”
Anyone who accepts an expired instrument (a check)
has No Legal Standing as a HIDC
Holder In Due Course
➢ Robert Triffin v. Somerset Valley Bank and Hauser
Contracting Company
• 80 counterfeit checks totaling $25,000 on authentic-looking
ADP check stock
• Bank returned the checks as counterfeits
• Triffin buys $8,800 in returned checks from four check
cashing stores, and as a HIDC, sued Hauser for NEGLIGENCE
for not controlling his check stock.
HIDC & Controlled Check Stock
http://caselaw.findlaw.com/nj-superior-court-appellate-division/1315264.html
➢ Lower court ruled in favor of Triffin, saying the
checks looked “genuine”
Hauser appealed; claimed he never had possession of
the checks or authorized their issuance.
Federal Appellate Court UPHELD lower court; ruled the checks
looked “genuine”
http://caselaw.findlaw.com/nj-superior-court-appellate-division/1315264.html
HIDC & Controlled Check Stock
Hauser Contracting ordered to pay Triffin $8,800
Solution:
Use controlled, high security checks
http://caselaw.findlaw.com/nj-superior-court-appellate-division/1315264.html
HIDC & Controlled Check Stock
Robert Triffin v. Pomerantz Staffing Services
• 18 counterfeit checks drawn on Pomerantz’ acct cashed at check
cashing store. Every check under $400
• Each check had a PRINTED warning on the face:
“THE BACK OF THIS CHECK HAS HEAT SENSITIVE INK TO CONFIRM
AUTHENTICITY”
• Check cashier cashed the checks without examining the back of the
checks
http://lawlibrary.rutgers.edu/courts/appellate/a2002-02.opn.html
HIDC & Controlled Check Stock
Robert Triffin v. Pomerantz Staffing Services…
➢ Counterfeit checks looked authentic on face, but DID NOT HAVE heat-sensitive ink on the back
• Because casher did not verify heat-sensitive ink on the back, it could
not claim Holder in Due Course status
•Triffin LOST because the security feature was absent, and forged
signature was not specifically disavowed
➢ Pomerantz’ check security features helped save him!
http://lawlibrary.rutgers.edu/courts/appellate/a2002-02.opn.html
HIDC & Controlled Check Stock
Sometimes an informed customer refuses a security procedure
that is commercially reasonable and suitable for that customer
and insists on using a higher-risk procedure because it is more
convenient or cheaper. In that case, under the last sentence of
subsection (c), the customer has voluntarily assumed the risk of
failure of the procedure and cannot shift the loss to the bank.
Official Comments to the Funds Transfers
provisions of the UCC:
More information on Holder In Due Course
can be found in Frank Abagnale’s Fraud Bulletin
available at SAFEChecks Booth 1601
“Old-School”Check Fraud
Check Fraud
Why talk about Check Fraud?
The FIRST Check Fraud Lawsuit in 1762
Price v. Neal, England
Price sued Neal for check fraud
Picture courtesy of Colonial Williamsburg
Check fraud has continued
unabated for 250 years!
Check Fraud
Produces more $ Losses
than all other types of payment fraud!
Fraudulent Payments by Method(Respondents were hit multiple ways; total > 100%)
0
20
40
60
80
100
Percentage
CHECKS 75%
Wire
Transfers 46%
Corporate
Cards 32%
ACH Debits
30%
ACH Credits
11%
AFP Payments Fraud and Control Survey 2018
This reverses the declining trend
in check fraud since 2010.
Fraud LOSSES by Method
(How Dollars were actually lost)
0
20
40
60
80
100
Percentage
CHECKS 43%
Wire
Transfers 23%
Corporate
Cards 20%
ACH Debits
10%
ACH Credits
5%
AFP Payments Fraud and Control Survey 2016(data not available in 2017 or 2018)
Technology is making Frank Abagnale’s “gift”
achievable by mere mortals
Frank Abagnale
Catch Me If You Can
“Checks have been and continue to be the payment
method most often exposed to fraud activity.”
AFP Payments Fraud and Control Survey 2018
Check fraud also accounts for the largest
dollar amount of financial loss due to fraud.
51% of large organizations
(plus millions of smaller companies)
still issue checks
Check fraud is not going away!
AFP 2017 Payments Fraud Survey
1) Placing a Stop Payment on a check ends your legal
responsibility to pay the check.
2) Positive Pay will catch all check fraud attempts.
3) Payee Positive Pay will catch all check fraud attempts,
including altered/added payee names.
4) I'm using Payee Positive Pay. The quality of my check
stock doesn't matter.
QUIZ: True or False?
5) In a Check 21 world, check security features don’t matter.
6) In a Check 21 world, check security features don’t matter if
you’re using Payee Positive Pay.
7) Your payables are processed by a third party (your bank) that
uses Payee Positive Pay. The quality of the check stock they use
doesn't matter to you. If there’s fraud loss, they'll take the hit.
8) If you have a great relationship with your bank, you’ll never be
held liable for a check fraud loss
QUIZ: True or False?
All are…
FALSE – Holder In Due Course (UCC)
trumps Stop Payments & Positive Pay
1) Placing a Stop Payment on a check ends
your legal responsibility to pay the check
FALSE – Altered Payee Names and
counterfeit checks
2) Positive Pay will catch all check fraud
attempts
FALSE – Added Payee name placed 2 lines above
the original name will pass right through
Payee Pos Pay
3) Payee Positive Pay will catch all altered or
added payee names
FALSE – Check 21 Indemnity Provision, & HIDC
and counterfeit checks that looked “genuine”…
(Triffin vs. Somerset Valley Bank and
Hauser Contracting Co. vs. ADP)
4) I'm using Payee Positive Pay. The quality
of my check stock doesn't matter.
FALSE – Check 21’s Indemnity Provision
5) In a Check 21 world, check security features
don’t matter
6) In a Check 21 world, check security features
don’t matter if you’re using Payee Positive Pay
FALSE – Check 21’s Indemnity
Provision and Holder In Due Course
Probably FALSE. It depends on:
– Whose bank account the checks are drawn on.
– What the contract says about losses. If the contract is silent, YOU
have the liability.
– The dollar amount of the loss.(I’ve never heard of a bank or other payables service provider volunteering by contract to accept check fraud losses.)
7) Your payables are processed by a third party (your
bank) that uses Payee Positive Pay. The quality of the
check stock they use doesn't matter to you. If there’s
fraud loss, they'll take the hit.
FALSE
- Florida Power & Light v. NationsBank
- Cincinnati Insurance Co. v. Wachovia Bank
- Healthcare Insurance company in the South
8) If you have a great relationship with your bank,
you’ll never be held liable for a check fraud loss
Today’s generation:What once was “old” is NEW
Outlaw Gangsta Crips, Brooklyn, NY
“...Gangs traditionally associated with drugs and
violent crimes are increasingly committing financial
frauds.
Gangs are getting into crimes like check fraud
and identity theft because they are more lucrative, harder to
detect, and carry lighter prison sentences....”
Wall Street Journal, March 8, 2016
“We think of gang members being
knuckleheads, but these guys are using a
sophisticated thought process and getting
involved in stuff that requires technology and
an understanding of the banking system.”
Wall Street Journal, March 8, 2016
“Prosecutors said the gang members created and
deposited fake checks, and then quickly withdrew money
from the accounts before the banks could identify the checks
as fake.
The alleged scheme reaped more than $500,000 for the
group....”
Wall Street Journal, March 8, 2016
Strategies to Prevent
Effective check fraud
prevention strategies start
with a high security check.
Do check security features still
matter in a Check 21 world?
YES!!
Why?
Check 21’s
Indemnity Provision
Check 21 Indemnity Provision:
Converting bank (company/person) is liable for any loss
that is directly related to the paying bank receiving a
substitute check in place of the original check
Indemnity Claims
An Indemnity claim can be filed within one year from the cause of
action.
✓ Cause of action begins to run the date the injured party first learnsof the loss.
✓ Claims must be made within 30 days after the person has reason to know or further losses cannot be claimed.
✓ Comparative negligence applies.
What check security features matter most?
Controlled check stock are checks that are
NOT sold entirely blank to anyone, unless
the face has been uniquely customized for
that organization.
1. Controlled check stock
Who Sells Blank, Uncontrolled Checks?
➢ Virtually ALL accounting / check writing
Software Vendors
➢ Virtually ALL check printers
1. Large, national printers
2. Small print brokers buy from wholesalers
Uncontrolled Checks
I bought “high-security” checks from multiple well-known check manufacturers…
…using a closed account number!
This CLOSED ACCOUNT NUMBER was used to order “high-security” checks!
Failure to Verify Name/Account #/ Address
Any ACTIVE account number could be used when ordering!!
ANY Name & Logo could be added
How is
Uncontrolled Check Stock
a problem?
Fraudsters use:
1. Adobe Illustrator
2. Scanner
3. Buy ORIGINAL blank check stock (uncontrolled)
to create authentic-looking counterfeit checks
–including Cashiers Checks and Official Checks.
Fraudsters Create Counterfeit Checks
SAFEChecks does not sell checks entirely blank unlessthe face of the check has been uniquely designed and customized for that end user.
For customers that use entirely blank checks we can print the company’s website along the edge, or a customized logo on the face, or something that is unique to that customer.
In contrast with other check printers…
Every new check order is verified with the bank
SAFEChecks has never had a check replicated
and used in a check fraud scam.
Additional Security Features
1.
2. Dual-tone True watermark
3. Thermochromatic ink
4. Correctly worded warning banners
5. Toner anchorage
6. Copy void pantograph
7. Chemical sensitivity
8. Chemical wash detection box
9. Inventory control numbers
Positive Pay...
...a powerful tool!
PositivePay.net
Payee Positive Pay
provides No Protection Against:
Added Payee Names printed 2 lines
above the original payee name. These
added Payee Names will evade
detection by Payee Positive Pay
Banks have NO Solution for checks
with a bogus Payee Name printed
2 lines above the original payee name
Open Areas Where Forgers Add A New Payee Name
Typical Check Layout
The “Solution”:
Secure Name and
Secure Number Fonts
created by special Printer Driver software
Secure Name Font
Secure Name Font printed above original payee name
helps eliminate Added Payee Name Risk
Fix it: Use a Secure Name Font
No room for an Added Payee
Secure Name Font printed above original payee name
helps eliminate Added Payee Name Risk
Leaves No Room for Adding Bogus Payee
Secure NUMBER Font
Secure NUMBER font blocks out area to prevent an Added Payee Name
Deterrence: Add WARNINGS to the Check
Deterrence: Encrypted barcode
Barcode contains:
1. Drawer
2. Payee Name
3. Dollar Amount
4. Issue Date
5. Check Number
6. Account Number
7. Routing/Transit Number
8. Date and Time Check was printed
9. Laser Printer used
10. The employee that printed the check
Software also creates a Positive Pay check issue file to send to the bank.
NO Technical Skills are needed to create the Positive Pay check issue file
Barcode is created by special software
Special softwarecan:
1. Accumulate check data and create a Positive Pay check
issue file
2. Change Font size
3. Add Barcode, Secure Name & Number fonts
4. Be configured to send Pos Pay files to bank automatically
Identical data is printed on both checks.
Which check would forgers prefer to attack?
Typical Check Layout –Check is on top and shows thru window envelope
Software can Reposition Check Placement
Payee Name, Address, is printed in TOP white panel.
Check is re-positioned to the bottom.
Check is Z-folded with TOP PANEL showing thru window.
It is not obvious the envelope contains a check.
8934 Eton Avenue
Canoga Park, CA 91304
Loose Ends…
Legal Reasons to Use Positive Pay &
Multiple Payee Names on Checks
&
ACH Filters and Blocks
Legal Reasons to use Positive Pay
If Multiple Payee Names on a check do not include
the word “and” after the names—
the Payee is “ambiguous” and legally means “OR”
A forward slash [virgule, vər-gyül “/” ] = OR
Multiple Payee Names
Prevent unauthorized ACH debits from paying against your bank
account …
An unauthorized ACH debit MUST be returned within 24 hours
after it posts or it CANNOT BE RETURNED!
ACH Filters and Blocks
ACH Filters and Blocks are available through your Bank
Greg LitsterPresident
SAFEChecks
[email protected] [email protected]
Dr. Kasthuri Henry, PhD, CTP, Six Sigma Black Belt
Corp. Director of Financial Process & Interim Treasurer
Berkshire Hathaway / Duracell