Did you know it could save you significant programming costs to use a dummy signature?

Most of our Redbridge clients are now outsourcing the physical check printing and mailing to a third party through their bank.  Each time the client has an update in the signers, however, they may be faced with a significant bill from the vendor to make the programming changes and new templates required.  One recent client was hit with a bill for more than $5,000 to update their signers.  The bank offered an interesting unconventional solution for their consideration to avoid these charges in the future.  Some large corporations are actually using a ‘dummy’ or ‘shadow’ signature (or even a custom logo) in place of the actual signature of the appropriate employee.  This way, when a signer leaves the company or changes roles, the shadow signature can stay the same (no programming changes with the vendor) and only the agreement with the customer and bank would be updated.  The new signer would provide his/her authorization to use the shadow name on the physical check.

Does this increase your risk of check fraud?  Any digital signature, whether it belongs to a real or fake person can be copied.  Some clients have been doing this for 2-3 years with great results, however, you definitely would want to run the agreement through your risk and compliance teams before implementing this solution.  The bank recommends using two different shadow signatures based on the dollar authorization levels.  One employee can be the signer of checks over $5,000 while another employee is authorized up to $5,000.  Since all large corporations already have positive pay in place to catch fraudulent checks this could be an interesting solution to consider.

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