Community Bank Focuses On Fraud Prevention For Businesses
By Kristin Emery
You can’t make money in business or keep good customers if fraudsters steal your profits. Even in this electronic age, fraud involving paper checks rose in 2023 with the Association for Financial Professionals citing nearly half of organizations saying they experienced it. Many of these cases involved scams like identity fraud and remote deposit capture where the same check is deposited more than once costing victims more than $1.3 billion in losses. “Unfortunately, in our industry we see a lot of those each and every day. Fraud is so big in today’s world,” says Jim Mele, Executive Vice President, Director of Specialty Deposits, Payments and Treasury Management Services for Community Bank. A common scheme now is called “check washing,” which is exactly like it sounds. “The old-fashioned way was to try to imitate the check and routing number on the bottom,” Mele explains. “Now they’re stealing it right out of the mailbox, literally erasing the name or amount then rewriting it so the check still looks like all their old checks, just a different name and amount. That’s why it’s so important to have a fraud prevention product, like Positive Pay, in place for the business to protect against those type of things.” If the business writing the check does not have any type of fraud protection in place, they are at risk. “If that business does not have a positive pay product of any form, it will just clear for a different amount,” Mele says. “It’s something that’s happening in today’s world, and we’re seeing that much more frequently, unfortunately.” That’s why Community Bank is trying to educate business clients and be more proactive by sharing fraud prevention and detection products. “If the fraudster does get away with it, they know it, they’ll do it again. We’re doing our best to educate clients on this.
Treasury Management Services For Businesses
The US Department of Treasury’s National Money Laundering Risk Assessment projects losses from mail theft-related check fraud could top $30 billion this year. Treasury Management Services for businesses such as prevention and detection of check fraud are crucial. “Treasury management helps businesses move money from payment method to payment method to maximize operating cash while providing controls to prevent and enhance security,” Mele says. “You want to bank securely. You want to operate efficiently and minimize financial risk. Treasury management is specific to the business client and offers a variety of products and services to make sure that we are moving money efficiently in a manner that’s timely and accurate while providing security to those payments.”
Even as businesses and people increasingly bank electronically today, checks are still a high-volume payment method in business. “Checks are still a very high-volume payment method among businesses today,” Mele adds. “As much as they’re using electronic movement through a wire transaction and an electronic ACH, check processing is still very live and vibrant today. There are still billions of checks that get processed from business to business or business to consumer. We really want to educate businesses about the products and services that are available to help mitigate their chance of loss.
Community Bank recommends and offers a number of products including check block, traditional check positive pay and reverse check positive pay. “If you don’t write checks on a particular account, you can put a full check block on the account, meaning no checks ever hit this account,” Mele says. The other two methods make sure only those checks the business writes are cashed. With traditional check positive pay, a business provides the bank with a list of the check details and payees. “We can take an issuance file of the checks that are written from the business and who they’re writing them to, upload that into our bank system for their account, and as those checks clear, we match it against the file of information prior to payment and communicate any mis-matched items to the client for daily review.” Reverse check positive pay works on a check-by-check basis to confirm validity. “As the checks come through the system, we report every day to the business on what’s clearing their account and they provide us the decision to pay or not pay the item.
Community Bank can tailor these tools to the needs of each business client. “Every business is different, and every business has a different process,” Mele stresses.
“Sometimes, companies and businesses do weekly check runs. Maybe they do daily, maybe they do monthly. Either way, we have the ability to help our business clients. If they have something out of that cycle, they can manually upload that to us via the online banking system very easily. So, we have multiple ways to communicate and meet their needs.”
Not every business customer takes advantage of these tools, but Mele says the number is steadily growing. “Most are getting much more accustomed to it. There is a cost for it because there are efforts our team needs to build and provide communication for it, but it’s low dollars for the volumes and reduction of financial risk. There is a commitment, but it’s a very small commitment from a client that needs to make that decision.” Mele says not putting fraud prevention or detection products in place can leave a business vulnerable to fraudsters again and again. “You could have it create a massive financial and major disruption issue for you, because if the check fraudster knows if you’re not checking it or it doesn’t get returned, they’re going to keep hitting you. So, it is good practice.”
While using the tools may require a bit of a learning curve at the start, Mele recommends businesses look into the services to protect them-selves. “We obviously work through it with them, so it keeps it very timely and efficient for them, and ultimately saves them a lot of money down the road.” In his 30-year banking career, Mele has seen what fraud can do to a business. “If you don’t have these types of protections in place as a company, you risk losing a lot of money in a very short period of time, and that’s obviously not financially good for the company,” he says. “We’re here to consult, advise and help partner with our clients to learn from these situations and our experiences. Our goals for our business clients are about creating a positive client experience, being proactive and making it simple and easy to utilize.”
For more information on treasury management services for businesses, reach out to Community Bank at any of its local offices to connect with a treasury management sales staff member. MEMBER FDIC
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