Editor: I was surprised to read the front-page story in the Sept. 21 edition about the fraudulent check problem the Bryan County Tax Commissioner had. "Positive Pay" is a standard feature in most business checking accounts these days, and would have stopped any such fraudulent check from clearing the tax commissioner’s bank account. The office I work for in Savannah has used this for years, and it has successfully stopped several similar instances on our account.
With the most common type of "Positive Pay" feature, the firm issuing checks simply sends a file to their bank each day they cut checks, listing the check number, amount, date issued, and payee name.
Once that data is uploaded on the bank’s system, as checks come through to clear, if they are not listed on the bank’s "positive pay file," they are rejected back to the bank who initially accepted them for deposit, and never post to the issuer’s account. The bank or firm that accepted the fraudulent check to begin with is then on the hook for any funds advanced, not the check issuer.
The other way "Positive Pay" works is for the bank to send an email each day to the company whose checks come in to be paid, listing the check numbers, amounts, and payees, and it is then up to the responsible person at the company to review those items and either accept or reject them. That takes a bit more work, but is another way the company protects its bank accounts.
I hope this is helpful to your readers.