Steps to protect your IOLTA account.

1. Protecting Your IOLTA and Operating Accounts
Posted on08/22/2016
A recent headline reads:
Bank Escapes Liability Where It Accepts Two-Party Check
With Only One Endorsement
Hey, wait a minute! Isn’t the bank required to honor restrictions placed on my operating or IOLTA
account?
Probably not. Under the UCC, businessaccounts, including your IOLTA account, may be heldliable if
signatures are forged.
Don’t assume that any of the followingrestrictions on your account will be honored:
 Multiple endorsements [The situation highlighted above]
 Signature limitations[For example: Two signatures required for amounts over $500]
 Stale dates [Voidafter 60 days]
Stop payments aren’t the answer either. They are generally good for a limitedtime only and can be
disproportionately expensive,depending on the amount of your original check.
If you fall prey to a counterfeit scam it is unlikelyyour bank will come to your rescue
and restore funds. As noted above, commercial account holders have very limited recourse.
What Can I Do to Protect My Bank Accounts?
Go to your bank and sign up for fraud prevention services:
 Positive Pay or Payee Positive Pay [PP]
 Reverse Positive Pay [RPP]
 ACH Block and Filter [ACH Controls]
 Proxy Accounts
Ask the banker about “Fraud Prevention Services” or “Disbursement Risk Management
Services.” Here is a quick primer:
PP and RPP Services
PP and RPP services match the checks you’ve written against checks presented.When a non-
matching check appears, you are alerted. The process varies slightly from bank to bank. Here are
some examples from Chase, Wells Fargo, and US Bank.
ACH Controls
ACH is the system that moves money and information from one bank to another electronically – via
direct payment and direct deposit. You can block all ACH transactions [prevent any money from
moving into or out of your accounts electronically] or filterACH transactions. With filtering,you set
criteria to determine who can or cannot move money into or out of your accounts. For additional
tips on foilingACH fraud, see this post.

2. Proxy Accounts
The WellsFargo version of this service is called Perfect Receivables®. It works to protect your
accounts by providing “proxy” account numbers for your use when receiving ACH and wire
payments. For example:
New corporate client [NCC] wants to pay a $10,000 retainer by initiating a wire transfer. Instead of
providing NCC your IOLTA account number, you give them a proxy account number issued by your
bank. NCC doesn’t know the difference.Your IOLTA account number remains private and
protected.
Final Words
In addition to the above, it never hurts to stay on top of the latest scams – because believe me, they
won’t stop. And if you didn’t seem this post, take a gander. This is yet another way scammers can
steal your money: using your endorsement on the back of their cancelled retainer check to open a
counterfeit bank account.
[All Rights Reserved 2016 Beverly Michaelis]