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Since account numbers are re-useable for fraudulent transactions, anyone you write a check to has the opportunity to print their own check with your account number on it.

One way to help reduce the risk of you actually losing money is to only transfer in enough money to cover the checks you have written. (transferring between multiple accounts in my own bank is instant, no inter-banking system delays) You can do this on your smartphone or computer every time you write a check. However, it only makes the problem worse if the fraudulent check clears before your real checks clear, because then you are only blocking legit checks. If the fraud was to late or to large amount, you successfully limit the problem to the bank's overdraft fee.

Are there banks that offer a more effective pre-approval capability? (free or otherwise) This would mean you log into the account to approve a check for the specific amount (and perhaps other specifics), without needing to limit the available funds. Additional white-list features might could be placed for my monthly utility and telecom bills.

Forget for a moment whether this feature would be used or liked by the account holders. And I am aware that I add to the risk I will mistakenly bounce a check, which, if it was to my credit card company, could be very bad.

  • What is the closest thing, which is commonly available in bank accounts?

  • What kind of roadblocks might stop a bank from implementing this feature? For example, the cost of stopping other banks from withdrawing money.

    I don't know how the banks work internally, but I know that banks have the ability to block transactions, because you can call them up and "stop a check", essentially a blacklist. (for a fee)

  • Is this a mute point, given the current safeguards? (I assume there are ways to report fraud after the fact, but I never had the problem, and don't know if you can get overdraft fees from fraud refunded, or if the fraud was successful, if you can recover the total fraud amount.)

This question is not limited to checking accounts, credit card accounts are also of interest.

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I don't believe there is such a process. My observation (i.e. my opinion) is that banks will have a level of security walls appropriate to the cost vs risk they experience. Since as Frazell says, your liability is limited for this type of fraud, you personally bear little if any risk. If this fraud were common enough that the cost of your proposal outweighed the expense, they would implement it.

On a similar note. Credit card fraud can be reduced ten fold if a PIN were required for all purchases. The 3 digits on the back helps prove the card is there, and you just didn't steal the from 16 digits, but a 6-8 digit PIN required at point of sale would be tough for the thief to guess. How much software to do this would cost, I don't know, but the idea is brilliant, even if it's mine. 10 fold reduction, if not 100 fold. (Any bank guys reading?)

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    Sounds somewhat like the PIN we (in Europe) use for (many, not all, but the ones with signature can be refused without giving a reason by the one billed) debit card transactions... (debit cards are at least here in Germany much more common than credit cards) see e.g.: en.wikipedia.org/wiki/Maestro_card (as MasterCard is US-based, I wonder: don't they use PINs in the US?) – cbeleites Jun 21 '12 at 19:47
  • @cbeleites, Answer: not on Credit Cards. But if you select "debit", I think it asks for a pin, don't remember. (However, many debit cards are credit-card compatible. I don't know why, but I was told it was preferable to tap credit on this type of debit card. It's been so long though.) Furthermore, I was told that the ability to cancel a fraudulent transaction is less expedient on debit cards. (even if they were credit compatible) That might have something to do with the preference, or it could just be marketing success by the credit card companies. – musicwithoutpaper Jun 21 '12 at 22:32
  • @cbeleites, Joe, that is an interesting point. They could offer a debit-system-compatible credit card, and then block off the credit-card system capability. That would introduce the PIN requirement while still preserving a credit line and other credit card features. (However, you would usually need to use a different card for online transactions, because debit-card systems are much less common online.) – musicwithoutpaper Jun 21 '12 at 22:37
  • @musicwithoutpaper: canceling (fraudulent) transactions. (I don't know for sure, but) afaik the debit card transactions here are seen as very similar to (other) automatic withdrawals from your account. Those technically wait for your approval, so cancelling them doesn't even require a reason though you have to refuse the transaction within some weeks of receiving the account statement (see also my description here: money.stackexchange.com/a/15237/6258). – cbeleites Jun 22 '12 at 15:04
  • My experience of cancelling a CC payment* is that this was more hassle than refusing an automatic withdrawal is supposed to be + I had to give a reason why refusing is legitimate (maybe a trick of the bank). (*it is a proper credid card, but I actually work it on a positive balance instead of credit: my credit line is basically how much money I choose to put onto that card - which I consider an excellent possibility to limit the amount that could be fraudulently accessed in the first place - was a bit of discussion to get my credit lowered, though...) – cbeleites Jun 22 '12 at 15:20
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There is no bank that I know of offering such a feature and I'm not sure what the point of it would be (other than to annoy their customers).

If you've been subjected to a fraudulent check your best bet is to either choose to write checks only to trusted parties and/or use your banks BillPay service (they usually issue checks on another account while transferring the money from your account). The drawbacks of your current plan, bounced legitimate checks and high maintenance nature, outweigh the potential benefits of catching a fraudulent check since you're not legally obligated to pay checks you haven't written.

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The account you are looking for is called a "Positive Pay" account.

It generally is only for business accounts, you provide a list of check numbers and amounts, and they are cross-referenced for clearing.

It normally has a hefty monthly fee due to the extra labor involved.

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