How Check Fraud Happens — and How to Protect Your Business with Positive Pay
Check fraud losses topped $21 billion in 2024. Only 35% of businesses use the one tool that can stop it: Positive Pay. It's offered by nearly every bank—but rarely turned on. Here’s what you need to know.
Check Fraud Isn’t Just a Big-Business Problem
Every week, I hear stories from business owners blindsided by check fraud losses they assumed their bank would cover. The truth? If you’re not using tools like Positive Pay, you may be on your own.
Last week, I got call from a friend of a friend who had $40,000 in attempted check fraud. They caught some of it in time, but $17,000 got through. Their bank couldn’t cover the loss—because the tool that would have stopped it, Positive Pay, wasn’t turned on though their bank had offered it months before.
Why Fraud Slips Through
Many business owners assume their bank can tell if a check is fraudulent and stop it before it posts. But that’s not the case anymore. Today’s check fraud is sophisticated. Bad actors wash checks, replicate legitimate signatures, and use stolen or altered information that looks real.
And while we do take preventative measures—and catch a lot—we can’t catch all. That’s why banks offer fraud prevention tools like Positive Pay.
How Positive Pay Works
Positive Pay is a service that allows you to send your bank a list of checks you’ve issued—including check numbers, dollar amounts, and payees. When a check tries to clear, the bank compares it to your list. If it doesn’t match, you get to approve or reject it.
No match? No payout.
Why It Matters
Under U.S. banking regulations, business accounts don’t have the same protections as consumer accounts. If you decline a fraud prevention tool offered by your bank, you may be responsible for any losses.
This isn’t about fees. It’s about insurance for your business. For your cash. For your team’s payroll. For vendor payments. For your peace of mind.
What You Can Do Today:
If you don’t know who to contact, contact us: https://www.smartbank.com/treasury-management/positive-pay/
The Bottom Line
Positive Pay isn't just a bank tool. It's a safeguard. A small operational step that can make the difference between catching fraud in time—or absorbing a devastating loss.
And it doesn’t matter if you write dozens of checks or none at all—bad actors can fabricate and wash checks using stolen information. If your business account is vulnerable, you need protection.
Turn it on. Stay protected.
Area President - CRE at SmartBank
5moGreat reminder Rachael. Positive Pay is an easy step that prudent business owners should take to protect their cash. All of us that have been in banking for any length of time have seen companies robbed of their funds when Positive Pay would have saved them the stress, shock, and financial loss. This is a simple step that diligent business owners should implement immediately.
Associate Managing Director, Treasury Management
5moThis is great, Rachael!! Thanks for sharing!