Mon, Jul 27, 2020
Class action settlement distribution results in the dispersal of potentially thousands of checks to eligible class members. However, it is important to safeguard your settlement checks from potential fraud. Positive Pay and Reverse Positive Pay are two methods issuers can use to reduce the risk of liability for checks that have been obtained fraudulently.
Check Positive Pay is a fraud mitigation service that provides early detection of fraudulent, altered, or counterfeit checks. Banks that offer Positive Pay match all checks presented for payment against a check issue file daily. Any “suspect” check is sent back to the issuer with an image of the check for closer examination. Upon final review, the issuer gives final approval to the bank to cash the check or not. The default decision is to withhold cashing the check if express clearance is not given. Some banks offer Positive Pay free of charge, while others may charge a monthly fee for the service.
Reverse Positive Pay is a variation of the system, where the issuer is primarily in charge of monitoring their own checks. The bank notifies the company daily about all checks presented, and the company alerts the bank to decline a check when necessary. If the company fails to respond in a timely manner (24 hours in most cases), the check may still be cashed. Banks that charge for this service generally charge a lower fee, as it requires less work on their end.
Claims administrators prefer traditional Positive Pay for the following reasons:
Though the occasional upset payee may complain about a check that did not cash as quickly as he or she may have wanted, in our experience, Positive Pay is the safer bet
Kroll is the leader in complex settlement administration providing end-to-end expertise for class actions, mass torts, and regulatory and government administrations.