How does positive pay facilitate check fraud prevention?

• A. Blocks checks as soon as presented
• B. Verifies items presented for payment against the company's list and pays only those on the list.
• C. Requires signatures on all checks
• D. Sets a cap on the total daily check amount

Answer: (B)

Positive pay works by the bank checking each check presented for payment against a file of checks the company has issued. The bank will only pay items that exactly match the issued-check data (such as check number, date, and amount). If a presented check doesn’t match, it’s flagged or returned for review. This directly prevents fraud from counterfeit or altered checks because those items won’t align with the company’s approved list. It’s not about blocking every check automatically, requiring signatures on all checks, or capping daily totals—the protection comes from payment only for checks that match the issued list.