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60 The Authority | October 2025 new information can be entered. The new information can be added by typewriter, in handwriting, or with a laser printer or check imprinter. Payroll check fraud involves using an individual who works within a payroll check-processing company. The ‘insider’ prints duplicate payroll checks for various corporate clients, takes the checks from the premises and duplicates them for later use. The criminal also obtains full background identifying data on the client’s regular employees, which can be used in future crimes. Identity theft in check fraud occurs when criminals learn information about a financial institution customer, such as name, address, financial institution account number, social security number, telephone numbers, or employer, and use the information to misrepresent themselves as the valid financial institution customer. Fraud prevention Because fraud has become easier to commit, financial institutions have developed a variety of high and low- tech methods to ensure each check that enters their systems is authentic. Positive Pay , the most widely used check verification system, enables a company and its financial institution to work together to detect check fraud by identifying items presented for payment that the company did not issue. In the usual case, the company electronically transmits a list of all checks it issued on a particular day to the financial institution. The financial institution verifies checks received for payment against that list and examines rejected checks to find out if any items are fraudulent. Fingerprinting programs require any non-account holder presenting checks for payment to provide a fingerprint or thumbprint. The check presenter is asked to ink his or her thumb on a small pad and place the imprint in the space between the memo line and the signature line of the check being presented. If the financial institution later discovers that the check was fraudulent or altered, it can provide the fingerprinted check to law enforcement officials. Electronic check presentment (ECP) is an electronic/paper method of expediting check collection. A depositing financial institution captures payment information from incoming checks and transmits the information electronically to the paying financial institution, and then sends the actual check according to its normal procedure. During check posting, the paying financial institution identifies checks that should be returned and immediately notifies the depositing institution. How PLGIT Can Help Local Governments Here are a few basic recommendations that PLGIT advisors offer when it comes to check fraud prevention: • Consider reducing your volume of outgoing checks by using electronic transfers (ACH and wires) for payments. • Use PLGIT’s Reverse Positive Pay (see below), and Positive Pay if offered through other institutions. • Secure your municipality’s check stock before use. When mailing, place checks in secure mail receptacles. • Establish internal controls by keeping check signers and verifiers current, and monitoring account activity each day. • Be alert for bad actors or processes that may open up your authority to check fraud perpetrated either internally or externally. Vigilance is one of the very best lines of defense against fraud. In addition to these suggestions, PLGIT has its own programs to help combat this challenge to local governments: Reverse Positive Pay is a security feature that allows Investors to review checks and reverse a payment that should not be paid. Where this differs from Positive Pay verification is that municipalities designate internal check verifiers to receive email notifications each day as checks are presented on an account. Those verifiers then notify PLGIT’s Client Services Group by the next business day to ensure checks in question are reversed. PLGIT’s On-Site Electronic Deposit Service allows investors to make deposits into their PLGIT-Class account using either dedicated scanning equipment or the camera on a mobile device. In addition to reducing the risk of mail theft or loss, the benefits of this service include the rapid availability of scanned funds, lower processing costs at financial institutions, and enhanced organization and recordkeeping. Protected article continued from page 33.