News & Resources

When is a Check Not a Check?

Apr 04, 2012 Dave King

When it is taken electronically or more commonly known, as a “customer-not-present” transaction. There are very few tools to manage risk for such transactions. At least in a face to face transaction the check acceptor has the option of real-time electronic verification and asking for some form of ID to verify the check writer owns the checking account. This is not true when the “check writer” is on the other side of a keyboard paying a bill or making a purchase.

Here’s my wish list to stop those unseen ne’er-do-wells of the ACH world intent on engaging in some level of deceit or fraud:

·         A known database of “good” check writers updated in real time throughout the day


·         A database of negative check writer behavior also updated throughout the day


·         Consumer credit information tied to the checking account performance that can be used to create a Risk Score


There’s no way to stop all fraud, not even in the Credit Card environment. But ACH fraud can be mitigated to a fraction of what it is today. The key is creating a centralized database fueled by the actual groups that create ACH transactions: the processors, billers and third-party senders. As a combined group, that is revolutionary fire power.

Now, let’s do it all in a real-time environment.  Is this too much to ask? In today’s world yes, but construction is underway.

Data usage comes with protection for the consumers. FCRA is in place to regulate security and best interests the consumers and their data. GLBA provides an added layer of protection to the suppliers of the data to the database manager and operator. The end-game is to make ACH transactions attractive as a substitute for the high cost of credit card usage at a small fraction of the price.

The tools are in place, the desire is strong, and technology is finally coming to the Check and ACH verification game.