(This column originally appeared in the Inquirer)
A client of mine had a check they mailed stolen before it reached their supplier. The check was altered for a different payee and amount and then cashed. Another client said someone got a copy of one of his company’s checks and created counterfeit versions using AI.
Countless clients have reported unauthorized electronic check requests made to their bank accounts, with more than a few finding out after their money had disappeared.
Check fraud is real, and it’s bad.
“Check fraud remains a major threat, and businesses are becoming much more aware of it,” said Janet Miller, senior vice president at Fulton Bank in Philadelphia. “Fraud has become so prevalent. Five years ago I’d have conversations about fraud protection with my clients, and there was a resistance to it. But now it’s like, yes, we need to protect ourselves!”
A 2025 study from the Association for Financial Professionals found that 79% of organizations experienced attempted or actual payments fraud in the past year, with 63% representing attempted or actual check fraud.
Checks, which the study says are still used by 91% of businesses, remain the single most-targeted payment method, but, according to the study, wire transfer fraud was reported by 63% of respondents, up from 39% in the previous survey, and ACH (Automated Clearing House) credits fraud was reported by 50%.
“Fraud is something that only expands,” said Tom Gregory, head of Treasury Management, Merchant and Government Banking at TD Bank. “New technologies like AI and spoofing, key logging, and social engineering are always creating new ways of perpetrating crime.”
Ask any accountant, and we’ll say that there are certainly internal controls that should be implemented at your company to help reduce the risk of check fraud. These would include multilevel approvals, better security over physical checks, segregation of duties among financial people, mandated vacations, and cross training.
But one of the best defenses growing in popularity is called Positive Pay, a banking service that helps prevent check and payment fraud. I’ve been urging all of my clients to subscribe to this service, which is offered by most banks.
Melissa Jetland, a senior vice president at Fulton Bank, says Positive Pay is a powerful risk management tool for your company’s cash.
“Think of it as the simplest way to put a gate in front of your money,” she said.
Positive Pay works in two ways. For regular paper check payments, your company electronically sends your bank a list of the checks (which includes payee, purpose, amount, date), and the bank then matches that list against the actual check payment request made by the payee. If the payment request doesn’t exactly match all the data on the list, it gets rejected.
Positive Pay also works with ACH payments. In this manner you tell the bank which vendors are allowed to make debits to your account. Any request that doesn’t have an authorized vendor will be rejected.
“If you don’t do that, the bank is obligated to post every debit that comes because in an ACH system, the originating bank warrants their validity — even if the payment hasn’t been authorized by you,” Gregory said.
Why wouldn’t most small businesses sign up for Positive Pay? According to recent market research of U.S. financial institutions, only 29% of banks and credit unions are satisfied with their current Positive Pay adoption rates. Other industry reports estimate that only about 35% of eligible business customers currently use the service, despite the recent surge in check fraud.
Yes, there is an additional cost (generally $25 to $100 per month for basic Check Positive Pay), but Fulton’s Jetland believes one of the biggest barriers isn’t cost. It’s the belief that Positive Pay is cumbersome.
“It really is lack of education,” she said. “Some owners worry that uploading check files and reviewing exceptions will be difficult and time consuming, but that’s usually not the case.”
According to research by a financial technology provider, more than 75% of banks expect Check Positive Pay adoption to increase over the next two years.
It’s effective. One study from last year by a fraud prevention services company found that 77% of users with Positive Pay reported fewer check fraud attempts or losses.
Subscribing to Positive Pay doesn’t completely protect you from fraud. Gregory says that things like daily account monitoring, setting up check and ACH blocking on your bank accounts that are never used for disbursing money is also important.
“Understand that fraud prevention requires multiple layers of defense,” he said. “There’s really no 100% ironclad fail-safe system. But layers of control and being mindful will reduce your risk.”
As an accountant, I’ve learned that fraud prevention isn’t about finding one perfect solution. It’s about building layers of protection. Positive Pay may not stop every criminal, but it has become one of the easiest and least expensive layers a small business can add.
Miller says that Positive Pay is a good insurance policy for every company’s cash.
“It’s a very manageable cost and the protection it provides is worth it,” she said.
