Return to Insights

Case study: Protection against check fraud

11.04.19
  • SHARE

“Guess what? Payee caught an item.” This was not the statement Tammy Cuda, CFO of MacDonald and Owen Lumber Company, expected she would say when she first adopted Payee Verification. 

Like many business owners, she did not expect her company to be a target of fraud. In fact, Tammy had reservations about adopting Payee when it was first introduced to her by her long-time business banker and strategic partner, Ann Abraham, VP of business banking. Tammy’s main concerns were cost and time. She wanted a system that could easily integrate with her existing systems and wasn't sure Payee could do that. Despite initial reservations, Tammy decided to try Payee.

“Ann has a genuine concern for the health and protection of our company. So, when she suggested a service that could protect our business, I was interested in what she had to say. We eventually found that the time needed to use the system is minimal. Once you establish a good system for importing, it became as simple as clicking a button,” Tammy said.

Payee ended up saving MacDonald and Owen Lumber not just $30,000 in losses but potential future losses.

A fraudster was caught washing the check, which had been stolen from a client’s mailbox. “The client’s name had been washed off, and we wouldn’t have caught it without Payee Verification,” Tammy explained. Tammy and her colleagues could hardly believe how professional the fraudulent check looked. It looked like it came out of their own printer.

Payee caught the fraudulent check immediately, which saved MacDonald and Owen Lumber a lot of time they would have spent with authorities trying to get their funds back. Under the Uniform Commercial Code (UCC), banks need to be notified within 24 hours of the fraud or there is no guarantee the funds can be recovered.

Companies whose line of credit are tied to their checking accounts are especially vulnerable to the risk of fraud. “If that fraudulent check had gone through, it would have been very easy for them to keep drawing into our line of credit. They could write multiple fraudulent checks before we would even notice what was going on,” Tammy elaborated.

Payee Verification

Payee verification protects the payee against check fraud by evaluating the payee name between the issued checks filed and the actual check presented. It provides an additional layer of protection against check fraud, a top payment fraud for businesses.

Checks are the payment method most often exposed to fraud activity and accounts for the largest dollar loss due to fraud. Writing checks is still the top way businesses are paying their vendors and just last year alone, check fraud affected 74 percent of businesses. Many business owners share a false sense of security, believing that only large corporations are targets for fraudsters. In fact, small and medium-sized businesses are just as likely to be at risk of fraud. Since many businesses fail to understand the risk of check fraud, few take proper measures to prevent the issue.

Not being protected against check fraud exposes businesses to an expensive risk.

Ann has met her fair share of business owners who do not think they will be victims of fraud. “People buy homeowner’s insurance because it lets them sleep better at night knowing they have that extra protection. When you buy insurance, you are basically protecting yourself against potential financial loss,” an analogy Ann gives her customers when they are unsure of how Payee can help their businesses.

But Payee is also more than ensuring a peace of mind. It is also an inexpensive, efficient and simple-to-use loss prevention system. “It is the cheapest insurance against loss. With mobile approval, you can be sitting poolside or having a lunch meeting and still approve an exception. You can even have multiple people set up to approve checks,” Ann explained.

Payee verification is an example of how Bremer strives to find innovative solutions to help our business customers achieve their goals. It has saved many business owners from lots of headache and sleepless nights. Reflecting on when she was first introduced to Payee, Tammy said, “I’m glad Ann suggested it. It really is a necessity.”

About Ann Abraham

With over 35 years of financial service experience, Ann is highly skilled in commercial banking and treasury management. She has held multiple roles such as financial operations, electronic banking management, commercial deposit, treasury management and business banking. At Bremer Bank, Ann utilizes her wealth of financial knowledge and banking expertise to provide excellent advice and quality service to help her business customers succeed. Her most recent role before joining Bremer Bank in 2013 was at Associated Bank where she was a part of a commercial banking team. There, she received the 2006 Presidents Club award and 2012 Top Performer award. Ann graduated from the college of Saint Teresa with a degree in business management and a minor in theater studies. She is also a certified treasury professional and holds licenses in life and health insurance. )

More on Ann

About Michelle Chen

Michelle Chen joined Bremer as Social Media & Content Specialist in 2018, bringing with her over ten years of social media, digital content and community marketing experience across multiple industries. Prior to Bremer, Michelle worked for a tech startup, the University of Minnesota and Yahoo! Southeast Asia. With her extensive digital media knowledge, Michelle has conducted research and taught undergraduate courses in digital media at the University of Minnesota. Her research has won numerous best student paper awards at regional, national and international conferences. She also has publications in competitive peer-reviewed journals. No stranger to writing, Michelle has years of content marketing experience, writing for blogs and newsletters. Working in the marketing department at Bremer, she combines her academic knowledge and professional expertise to increase brand visibility, expertise and competitive advantage as well as to amplify the voices of Bremer employees on social media.Passionate about giving back to her community, Michelle is a board member of the University YMCA at the University of Minnesota. Michelle graduated from the University of Minnesota with a doctoral degree where she focused on ways to motivate behavior, and how to grow and retain brand supporters on social media. )

More on Michelle