Key Takeaways:
- Mail theft is a growing concern in the United States, with a 139% increase in 2023.
- Two Comerica customers learned the pain of fraud when their checks for over $200,000 were stolen and processed for a counterfeit payee.
- With a proactive approach and Comerica Positive Pay, these disasters could have been avoided.
Check fraud happens every day.
In the United States, this type of fraud is on the rise. In 2023, U.S. law enforcement released data showing a 139% increase in reports of high-volume mail theft. Incidents of mail fraud have become so bad that some government agencies and media outlets are encouraging businesses to avoid paper checks altogether.
For businesses, the need to protect funds is paramount. A fraudulent check can lead to missed payments, lengthy claims paperwork and even the complete loss of funds. In addition, once fraudsters have the routing number and account number they can create ACH transactions, counterfeit checks or even sell the account information on the dark web.
To highlight the impact of mail fraud, let’s take a look at a couple of examples.
Counterfeit checks continue to be a major source of risk for business payments.
Case Study 1: New car dealership
Comerica works with a car dealership based in the Midwest.
This company routinely makes check payments. On the day of this incident, they cut a check for more than $200,000 to a vendor and sent it via mail.
As is often the case with stolen mail, the company had no idea the check had been intercepted. They assumed everything was business as usual. Meanwhile, in the background, the thief created a counterfeit check using the identical information (check number and amount).
The only piece of information the thief changed was the payee’s name.
Mail fraud can happen when you least expect it. Without strong protection and proactive measures, your payments are at risk.
Lessons From Case Study 1
Fraud protection is important. This group of car dealerships was protected from a complete loss. Businesses should consider these lessons:
- The company could have used electronic payments in lieu of paper checks. Unlike paper checks, which are vulnerable to mail fraud, electronic payments come with increased security and reduced risk. That’s why many companies are shifting entirely to electronic payments.
- Some companies enroll in Positive Pay but don’t add the Payee Match service. Positive Pay is a fraud protection tool that enables customers to monitor and control check activity. The Payee Match service protects against altered payee names.
The combination of electronic payments and Positive Pay protection creates a firm barrier between counterfeit or altered checks and a company’s hard-earned money.
Comerica is investing in tools like Positive Pay to protect payments and fight fraud.
Case Study 2: Manufacturer
Comerica also works with manufacturers in the Midwest.
The story here is strikingly similar. This Comerica customer issued a check to a vendor for a similar amount as the car dealership in case study one. The check was intercepted in the mail, and the payee’s name changed by the thief.
This customer had Comerica Positive Pay set up. However, they overlooked a few key details. First, they used a signature stamp or simulated signature for their checks. Second, they declined Payee Match within their Positive Pay service.
As a result, when the check arrived it was processed. To make matters worse, the manufacturer was liable for the loss because they used simulated signatures on their checks.
Ultimately, this customer lost close to $200,000.
Lessons From Case Study 2
As you can see, fraud prevention comes down to the details.
Factors like genuine signatures and Payee Match — designed to protect the company — only work if they are active. Without these safeguards, companies may feel they’re protected while still being vulnerable to fraud.
The solution: Consider each step of the check approval process. Work with a trusted financial partner to identify risks and the right solutions to safeguard against them.
Are you proactively stopping fraud?
Check fraud continues to damage companies. Whether it’s a full loss or the time commitment of filing a claim and interrupting service, the consequences of fraudulent activity can set your business back.
Consider a proactive approach with Comerica. Learn more about Positive Pay and how you can put a firm barrier between thieves and your payments by contacting your Comerica Relationship Manager or Comerica today
This article is provided for informational purposes only. While the information contained within has been compiled from source[s] which are believed to be reliable and accurate, Comerica Bank does not guarantee its accuracy. Consequently, it should not be considered a comprehensive statement on any matter nor be relied upon as such.
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