“Marcel” was robbed by someone using an eCheck. Writing on Sitepoint, he explained that someone purchased services from him using an eCheck sent through Paypal. A month later, the customer complained that someone had gone “on a shopping spree” with their Paypal account, and requested a refund from their bank.
Marcel lost $120, and concluded that he would never accept eChecks or any checks again unless they came from a trusted customer.
Another forum contributor took a more sober view. “This has nothing to do with eChecks,” he wrote. “You’d have the same problem if they paid by credit card and filed a chargeback, or if they paid with PayPal funds and reported the transaction as unauthorized. The merchant is almost always the liable party when an unauthorized transaction is made, even if there was no way for you to know. It’s a cost of doing business.”
So much for eChecks as a risky form of payment. In fact while you can find case study after case study describing businesses and customers that have been defrauded, sometimes out of millions of dollars, by people using paper checks, you’ll struggle to find examples of people who have lost money as a result of eChecks. Even Marcel’s story dates back as far as 2008.
The security of an eCheck is a result of a number of measures built into the eCheck system that have substantially reduced the risks involved in the transaction process. In this chapter, we’re going to look at the two biggest risks involved in the use of eChecks, and how to reduce them.