Last year, businesses lost over $3 billion to check fraud, according to the Association of Certified Fraud Examiners.
It’s a crime that can be especially devastating to practices in certain areas of law, such as personal injury and real estate settlements, according to the creators of a cloud-based software protection program.
Even a solo firm could have over $1 million in a trust account, so a potential loss could be enormous, and the large number of checks issued every month means that multiple parties are involved, further increasing fraud potential.
“Unfortunately, many law firms don’t have any kind of check fraud protection because they worry about the workflow and cost involved,” said Rick Kabra, CEO of CosmoLex, the maker of CosmoLex 2.0, the latest release of the cloud-based law office software that supports Positive Pay, a customer authorization system that greatly reduces the instance of check fraud.
“CosmoLex streamlines the Positive Pay process, making it take just a few minutes per day.”
Positive Pay is a system used by most banks to greatly reduce check fraud by implementing customer authorization of each check.
Customers send the bank a list of all checks issued. When a check comes in for payment, the bank compares the check number and amount to the list.
If they do not agree, the check is rejected. The system makes it nearly impossible to alter or forge checks from participating companies.
A Positive Pay chain has three components: the accounting software, the bank and a third-party application that converts the accounting software information to a format accepted by the bank. Since there is no standard Positive Pay format, each bank has its own requirements (thus the need for a third-party translation application).
CosmoLex 2.0 has added Positive Pay support by making it easy for a law firm to generate a report listing all uncleared transactions.
This report is imported into a third-party application that converts it to the proper format and sends it to the practice’s bank. Positive Pay support is automatically available to all CosmoLex subscribers at no additional cost.
CosmoLex is a cloud-based legal practice management system with full trust account management and is used by hundreds of law firms across the country.
Other features included in the 2.0 release are team calendars, task lists, appointment setting and simple client and matter import from other legal applications.