First of all, who writes checks anymore?  They are so twentieth century.  Like . . . I mean . . . like . . . join us in the present. Just Venmo me! Hey boomer, the eighties called, and they wanted their Walkman, parachute pants, and checkbook back. Imagine having this conversation with someone. . . let’s just say a few years your junior – maybe even raised in a room down the hall – maybe someone that cannot function if you change the Wi-Fi password. By the way, if you gave this person a check, they would probably respond “I didn’t want a check, I wanted cash.”

So, who writes checks? Real estate attorneys – by the thousands. Given all the attention given to wire fraud, we like checks. They may be like a corded phone to our kids, but to us, checks are tangible. Checks are reliable. Checks are tested and proven. Checks, however, can still be vulnerable in the wrong hands.  While checks may not be as popular with the younger generation, they are still popular with all generations of title and settlement professionals and all generations of criminals. Luckily, we do not have to “do checks” the way that we did back in the twentieth century. We have a few new things at our disposal that are even more advanced than the “Clapper” (remember that sound-activated switch for your lights!) – namely Positive Pay and the new and improved Payee Match Positive Pay.

Positive Pay

When we were younger, if we asked our parents for a little spending money, they wanted to know how much, when, and why. If we passed this three-part test, they would approve the release of funds and we went on our merry way. Imagine if your parent could call the bank in advance and make sure that you were using the money the way they had approved – that is Positive Pay.

Bring that forward to present day.  Imagine if you called the bank every time that you wrote a check and said here are the checks that you are allowed to clear, any other check is probably fraudulent, so do not clear any other checks without confirming with me.  Wow, we would love that type of control over our accounts.  We all know that it would be impractical to call the bank every time that you wrote a check.  Besides, according to our kids, we are too busy wandering the aisles of Blockbuster looking for the VCR tape of the “Jane Fonda Workout.”  But what if you could have that kind of control, even while “Sweating to the Oldies”?

YOU CAN! Positive Pay is an addition to your bank account that allows you to automatically and securely upload a small file from your accounting software (iTracs®, SoftPro®, RamQuest, etc.) to communicate with your bank and provide it with a daily list of checks with that same instruction. The file contains the following information for every check written that day:

1. Check number.
2. Check date.
3. Check amount.

If any of these three do not match, then the bank must confirm with you to make sure that the check is authorized and legitimate before allowing the check to clear. This process feels a lot like the movie theatre calling your parents and asking if you are allowed to see the R-rated movie, when you actually told them you were going to see the ABC After School Special.  You remain in control, and the bank follows your instructions unless overridden by – you guessed it – you.  Who would not want that type of control over their trust account?

Positive Pay was adopted by ALTA’s Best Practices in 2013 “if available in your market.”  In 2022, ALTA’s Best Practices were updated to say that Positive Pay is required on checks – because it is available in everyone’s market. Right now, there is no plausible excuse to not provide your client’s money this type of control protection. If you do not have positive pay, you should contact iTracs or your bank today.

Recent Trends

There has been a growing trend of criminals stealing mail and looking for checks. For example, if there is an envelope addressed to the power company, it probably contains a check. Nobody just writes the power company to thank them for the fact that lights came on as expected. Also, more and more people are using “window envelopes” so that the name and addressee of the payee on a check show through without having to address the envelopes. The mail can be stolen at either end of the delivery chain – through that unattended box on the side of the road – or by robbing the mail carrier. In recent months, unarmed mail carriers have been robbed at gunpoint, and the crooks have stolen the master key to the blue roadside boxes. Doing so allows them to run their own route and collect the mail, or, more specifically, the checks in the mail.

All banks have a proofing department, but many do not look at checks with amounts less than $10,000, sometimes more. A lot of checks slip under the radar, but the numbers can add up quickly.  

Another trend is to take some bleach and a Q-TIP and remove or “wash” the payee name off the check.  The rightful payee name is replaced with either the crook’s real name or an alias. The criminal then takes it to the bank or uses their online deposit functions to receive funds in return for presenting the check. Back in the 80s, “acid-washed jeans” were all the rage – taking perfectly good serviceable clothing and altering it for a totally different look. The criminals are using this “old-school” boomer low- tech process to alter the check. The check will look different, minus the “Members Only” jacket and the mullet, and never make it to the intended recipient.

Payee Match Positive Pay

To combat this recent trend of “acid-washed” checks, Positive Pay has been enhanced to add a fourth element to the test for clearing a check.  As the name would indicate, it is “Payee Match.”  While Positive Pay is available everywhere, the Payee Match enhancement is beginning to spread across the nation like ghostbusters slime. Basically, the previously mentioned automated file being securely uploaded to the bank every day now has a fourth element.  All of the following must match or the check will not clear without your approval:

1. Check number.
2. Check date.
3. Check amount.
4. Payee name.

This additional step is tantamount to the movie theatre telling your parents that not only are you trying to see the R-rated movie, but you are with “that bad influence,” and the theatre is denying admission without parental consent to all of the above. Payee Match is not the end-all-be-all to check security because you will obviously not be there when the check is presented for payment. You do not possess the magical skills of Siegfried and Roy; however, the magic of Payee Match narrows the sea of risk a little further and makes the criminals work a little bit harder. At its very essence, a check is a written, dated, and signed instrument that directs a bank to pay a specific sum of money under your control and direction to the bearer.  You might think that if you already have Positive Pay, that Payee Match is automatic. Maybe it should be automatic, but it is not. While you cannot have Payee Match without having Positive Pay, you can (and may) have Positive Pay without having Payee Match.  Make the call today and make sure that you ask for both.

Positive Pay is the Backbone of iTracs

If you want to know more about Positive Pay and Payee Match Positive Pay, reach out to the iTracs team (800.326.484 or https://www.myitracs.com/contact)  to learn more. If you have chosen to use another accounting and reconciliation software, reach out to your bank and ask them. This one step will help you protect your clients’ money in your trust or escrow account and reduce the chance that you will have to hire Magnum P.I. to locate funds that went missing.