If you see ads touting software that you can download to immediately start writing checks and paying your vendors, you’ll want to tread cautiously. The provisions of the Bank Secrecy Act require that sellers of payment software complete several steps that will enable them to verify the legitimacy of their customers, says Richard Rogers, president of yourfavorite.com, publisher of checkwriter.com and several other payment applications. The reason? Payment software that’s available on demand and doesn’t require any verification of the purchaser’s legitimacy, could be used by anyone, anywhere in the world, to defraud others or commit terrorism.
To be sure, the Bank Secrecy Act focuses (not surprisingly) on banks and financial institutions, requiring them to know their customers. However, the principles come into play with corporate AP departments as well. For instance, while you may be able to head to Staples to purchase check-printing software, you’ll probably also need to mail the company to get pre-printed forms to use for the checks, or you may need to buy special ink to create the checks, Rogers says. When you do, the seller will need to check your address and identity. “Software that facilitates payment cannot be made available for download unless the physical address and/or identity of the recipient is identified and verified,” according to information on www.checkwriter.com.
In 2006, Qchex, an Internet-based provider of checks, had to halt its operations. “According to the FTC’s court filings, before September 2005, Qchex offered and sold its online check services without making any effort at all to verify that someone ordering a check on an identified account actually had authorization to write checks to be drawn on that account,” the Federal Trade Commission reported. As a result, scammers could use Qchex to appear to pay for purchases of goods or services, although the unauthorized checks ultimately bounced. They also could use Qchex in overpayment schemes. That is, they would write a check on Qchex and overpay an invoice, before asking for the difference to be wired back to them. By the time the checks ultimately bounced, the scammer had made off with the extra money.
While getting checks or payment software legitimately requires a bit more time, it still is pretty reasonable. At checkwriter.com, for instance, orders in by 2:00 P.M. can be delivered the next day, although rush charges apply, Rogers says. “It’s not burdensome.”