Pub. 5 2010-2011 Issue 5

www.nebankers.org 10 Extraordinary Service for Extraordinary Members. SECURITY OFFICER’S BY-WORD A FEW DAYS LATER, ON A LATE FRIDAY afternoon, a group of about 20 people with heavy accents came into the local bank and cashed payroll checks drawn on the local employer. The group went to all five branches of the bank, each person cashing a payroll check in the $900 range at eachbranch. The tellers verified that funds were in the account and veri- fied identification of the payees before cashing the checks. On Saturday, the same 20 people went back to each of the bank branches again cashing more checks. A teller, whose husbandworked for the business, questioned why they were being paid this week when her husband’s normal payroll was not until the following week. She called her hus- band who called the plant manager who multiple people cash the forged checks at multiple branches over multiple days, the loss to the bank can reachwell over $100,000. When a careful teller questions one of the checks, the crooks run from the bank often leaving some checks and identification behind. On occasion when law enforcement does catch one or more of the crooks, their story is that they were given the checks to cash and they were to keep some of the money and give most of the money to the per- son who gave them the checks. This is a difficult kind of forgery loss to stop without help from customers. Many good businesses use a large tran- sient workforce. Many good transient workers prefer to cash their checks rather than deposit payroll checks at a bank that will not be local to them as they move around the country. Refus- ing to cash checks for unknown tran- sient workers because of a few crooks is not a realistic solution. Encouraging or requiring busi- nesses to use a Positive Pay System will prevent these losses. When using Positive Pay, the business customer provides the bank’s computer with check numbers and amounts before providing the checks to recipients. When a teller cashes a check, the teller will first memo post the check and the computer will reject the transaction if the business has not shown the check number and amount as an issued and outstanding check. The bank’s com- puter system also verifies any checks received in a cash letter against the customer’s issued outstanding checks so that other types of forgery can be detected and any forged checks that are discovered can be returned by the required midnight deadline. Some Positive Pay Systems even use charac- ter recognition software to verify that the payee name has not been altered. Most bank check processing sys- tems have Positive Pay as an available option. However, because the cus- Fight Forged Check Losses With Positive Pay Charles M. Towle , Senior Vice President, Kansas Bankers Surety Co. confirmed there was no special payroll this week. The plant manager called the bank. It then was discovered that these checks were forged. The blank checks had been stolen during the break-in. They were taken from the bottom of the blank checks and had not been noticed as missing. Similar losses have happened over and over again at banks across the nation for several years. It is not one group of people, but is amethod of theft by forgery that is often used by groups of transient workers. Sometimes stolen blank checks are used. Sometimes, a worker’s legitimate check is scanned on a computer and look-a-like checks are printed. When A large local employer in a small town had its office burglarized. Nothing appeared to be taken but vandalism was evident. The company assumed it was just some kids.