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Positive Pay & Fraud

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Regarding Positive Pay services: Is an additional Affidavit of Fraud necessary when the customer has signed an authorization to return items due to fraud? We have a customer on a Positive Pay system, and have asked them to sign an affidavit as well.

One cannot sign an affidavit as to future events. At the same time, a bank could not possibly be expected to obtain from the customer an affidavit within the constraints of the midnight deadline on a reliable basis.

I believe that a deposit contract permits -- even requires -- the bank to refuse payment on items that it believes to be "not properly payable." A positive pay system is designed to provide the bank with the information it needs to recognize a fraudulent item as not having been issued by the customer. Some banks will confirm with the customer after getting the suspect "hit" from the system.

But I see no requirement for an affidavit here. What I do see is a possible need for a contract for the positive pay system that provides that the customer will issue such an affidavit if required after the item has been bounced (in order to pursue the perps).

First published on 3/01/04

First published on 03/01/2004

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