There is perhaps a greater awareness of fraud among consumers and real estate professionals today than ever before. Nevertheless, the negative impact of fraud continues to grow. The 2022 AFP® Payments Fraud and Control Survey found that in 2021, 71% of organizations across industries were victims of payment fraud and/or attempts. Additionally, the 2022 NICE Actimize Fraud Insights Report found that the attempted fraud rate across payment methods increased by 41% over the past year. Businesses must cover their bases to mitigate risk and provide a secure transaction experience for clients, partners, and consumers. 

During a recent Qualia webinar, Jessica Waicker, Attorney & Co-Founder of Lawyers Express Title, LLC, and Angela Saiz, Senior Vice President Fiduciary Banking at Capital Bank, joined us to discuss how title & escrow companies can protect funds and improve their reconciliation processes. 

Simplifying exception management with automated positive pay

Waicker shared that adopting automated positive pay has helped speed up the process of exception management. For example, Waicker uses automated positive pay to reduce certain manual and time-consuming tasks. “Before automated positive pay, I would have to upload files manually from the software to the bank. It was something you had to remember to do every day. It got to a point where it would snowball and I would have a slew of exceptions that I would have to clear. Having that automated, I often have no exceptions to clear on the positive pay side.”

The automated positive pay features in Qualia have also helped Waicker’s team detect fraud or error for multiple transaction types. She shared that her team often sees consumers inadvertently attempting to redeposit checks via mobile transactions. Although this type of transaction usually involves smaller funds, Waicker said they can “wreak havoc” on escrow accounts. She explained that automated positive pay offers a quick and easy solution for duplicate checks. “If somebody attempts to deposit a check more than once, I get an exception, and I can decision it right away and not pay it.” Simplifying this process has enabled her team to catch these exceptions early and stop duplicate checks from clearing.

How to work with strong bank partners to detect fraud and avoid disruption of business operations

Positive pay can also be a critical defense against larger fraud attempts. Waicker shared that her team was almost a victim of a fraudulent check cashing scheme, but was able to prevent it due to close coordination with their bank. Because Waicker had positive pay enabled, a representative from their bank was to alert her team of a series of fraudulent checks that they identified. Waicker’s team was able to stop the checks from clearing without needing to shut down the account. Saiz added that in the real estate industry, “it’s not easy to just close your account and open a new one. You’re then reconciling until all those monies are gone and have been dispersed to the right people.” By preventing fraud before it occurs, title & escrow companies avoid disrupting business operations to restore accounts and try to get back any lost funds. 

Identifying strong bank partners with a deep understanding of the title & escrow industry is indispensable for businesses looking to tighten up their operational processes. This additional level of support can help title & escrow companies catch fraud and prevent it from impacting their accounts. In looking at trends in fraud across the industry, Saiz said that she sees “a large amount of check fraud” and that this type of fraud can be extremely impactful on a title & escrow company. One way that Saiz’s bank prevents these fraudulent checks from succeeding is by doing a 4-way check. This process ensures that each check has the correct date, payee, check number, and amount. Checks that do not match this 4-way check are marked as an exception. These daily processes ensure that title & escrow companies and their bank partners protect their accounts. 

How detailed supporting documentation leads to stress-free audits 

Organized notes in a business’s system of record are key to staying audit ready. Waicker said that following note-taking best practices can help title & escrow companies go into audits feeling prepared. “You want to know what the auditor is going to ask you about before the auditor is there. You aren’t going to remember exactly what happened on a closing from last spring when your audit happens in the fall…having clean, organized systems is one way you can do that.” 

She added that digital notes on individual files, tasks, and accounting items have been valuable in helping her team remember specific details that are important to know during audits. Waicker said that these notes can help someone immediately understand what’s going on in a file, which can make audits less painful.

Title & escrow companies that leverage their software and bank partnerships effectively can speed up painful reconciliation processes. Ultimately, these best practices enable businesses to detect fraud and simplify audit preparation. Learn more about how Qualia’s reconciliation service can enable stress-free audits by requesting a demo today.

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