Sorry, no cheques
Telecoms firm Flow has advised that it will discontinue the processing of cheques for paying bills by residential customers, effective December 1, in a move aimed at clamping down on fraud which has ballooned across the corporate sector in recent months.
Flow, which is a subsidiary of Liberty Latin America, is the second utility company to announce its decision to cease accepting cheques for bill payments due to an increase in fraudulent activities.
Just two months ago, light and power company the Jamaica Public Service (JPS) said it would stop accepting cheques for bill transactions via payment agencies and at its offices after consideration and consultations with its partners.
The changes at the light and power company were made with immediate effect.
JPS did not detail the impact of the fraud activity on its daily operations, but in a response to queries from the Jamaica Observer, Flow said that it has seen a “noticeable increase” in the number of fraudulent transactions via cheque payments made by residential customers.
The company explained that the fraudulent transactions are typically carried out using cheque leaves drawn on multiple business names which are made payable to multiple residential accounts.
“These payments are credited to the residential accounts. However, the business upon which the cheque is drawn is fictional and so, this results in a fraudulent credit to the account,” it said.
On average, it takes the communications company about 25 business days before it catches up on the fraud activity when the cheques are returned by the banks.
The Bank of Jamaica defines fraudulent cheques as the unlawful use of cheques to illegally obtain or borrow money, such as counterfeit, forgery, or alteration in its Financial Stability Annual Report 2022. For the banks, cheque fraud remains one of the areas in which it has the least vulnerability, according to the BOJ report; but Flow says the fraud scheme is causing it to dole out more cash on operational and administrative costs.
Its coverage of the communications market is also being impacted by delays in the payment process which causes some customers’ accounts to move into a state of suspension or disconnection.
“As such, effective December 1, 2023, cheques will no longer be accepted as a form of payment for residential and postpaid mobile accounts at Flow locations and our bill payment partners. We will, however, continue to accept bill payments being made via cheque for business accounts,” Flow said.
Flow added that although there have been some instances where cheques are returned for commercial customers, they were isolated and non-material occurrences. It said while it is unlikely that the company will discontinue cheque payments for commercial customers at this time, its review is ongoing.