A recent headline reads:
Bank Escapes Liability Where It Accepts Two-Party Check
With Only One Endorsement
Hey, wait a minute! Isn’t the bank required to honor restrictions placed on my operating or IOLTA account?
Don’t assume that any of the following restrictions on your account will be honored:
- Multiple endorsements [The situation highlighted above]
- Signature limitations [For example: Two signatures required for amounts over $500]
- Stale dates [Void after 60 days]
Stop payments aren’t the answer either. They are generally good for a limited time only and can be disproportionately expensive, depending on the amount of your original check.
If you fall prey to a counterfeit scam it is unlikely your bank will come to your rescue
and restore funds. As noted above, commercial account holders have very limited recourse.
What Can I Do to Protect My Bank Accounts?
Go to your bank and sign up for fraud prevention services:
- Positive Pay or Payee Positive Pay [PP]
- Reverse Positive Pay [RPP]
- ACH Block and Filter [ACH Controls]
- Proxy Accounts
Ask the banker about “Fraud Prevention Services” or “Disbursement Risk Management Services.” Here is a quick primer:
PP and RPP Services
PP and RPP services match the checks you’ve written against checks presented. When a non-matching check appears, you are alerted. The process varies slightly from bank to bank. Here are some examples from Chase, Wells Fargo, and US Bank.
ACH is the system that moves money and information from one bank to another electronically – via direct payment and direct deposit. You can block all ACH transactions [prevent any money from moving into or out of your accounts electronically] or filter ACH transactions. With filtering, you set criteria to determine who can or cannot move money into or out of your accounts. For additional tips on foiling ACH fraud, see this post.
The Wells Fargo version of this service is called Perfect Receivables®. It works to protect your accounts by providing “proxy” account numbers for your use when receiving ACH and wire payments. For example:
New corporate client [NCC] wants to pay a $10,000 retainer by initiating a wire transfer. Instead of providing NCC your IOLTA account number, you give them a proxy account number issued by your bank. NCC doesn’t know the difference. Your IOLTA account number remains private and protected.
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In addition to the above, it never hurts to stay on top of the latest scams – because believe me, they won’t stop. And if you didn’t seem this post, take a gander. This is yet another way scammers can steal your money: using your endorsement on the back of their cancelled retainer check to open a counterfeit bank account.
[All Rights Reserved 2016 Beverly Michaelis]