Certified Fraud Examiner Practice

Positive pay is a cash management service offered by banks to help businesses mitigate the risk of check fraud. It specifically aims to prevent fraudulent checks from being processed and honored by the bank. When a company issues checks, it submits a list of those checks to the bank, which includes details such as the check number, date, and amount. When a check is presented for payment, the bank compares it against this list. If the check matches the information on the positive pay list, it is paid; if it does not, the bank can either return it or alert the company for further action.

This process effectively protects businesses from losses associated with unauthorized or altered checks, making it a powerful tool against check-related fraud. While the other options touch on different forms of financial risk—such as invalid checks, unauthorized transactions, and identity theft—they do not specifically capture the purpose of positive pay, which is solely focused on verifying the legitimacy of checks issued by the business.