Recently, I spoke with yet another utility that has experienced fraud with customers entering bogus checking account numbers when paying by echeck.

Echeck payments allow your customer to enter the routing and account numbers from a check to electronically deduct the payment from their checking account.

Customers are creative

Several years ago, another utility reported that a customer used the routing and checking account numbers from their paycheck to pay their utility bill online. It went undetected until the customer’s employer was balancing their bank statement and discovered the fraudulent charge.

Buying time

Unlike a debit or credit card transaction, echecks are not validated as they are entered. It’s not until the bank, as represented by the routing number entered by your customer, processes the payment as an ACH transaction that the payment is rejected.

This process can take a day or two, and unscrupulous customers know this, hoping to buy time. For obvious reasons, this happens much more frequently right before cut-off day, as customers hope to delay their disconnection.

What are your remedies?

Hopefully, your online bill pay platform allows you to restrict customers who have tried to defraud you from paying by echeck in the future. Similarly, you should be able to block customers who have used fraudulent credit cards from paying by credit card.

Unfortunately, blocking customers who have already defrauded you doesn’t prevent others from doing the same.

Should you continue offering echeck payments?

Most banks issue debit cards to their checking account customers, so your customers who want to pay online could easily use a debit card rather than an echeck payment. If you charge a convenience fee for online payments, it’s often lower for echecks than for debit or credit cards, which is presumably why customers prefer echecks to paying with their debit cards.

I know of several utilities that will disable the echeck option from their online payment platform as cut-off day approaches. This is to avoid customers who would otherwise be on the cut-off list from using this trick to buy a few extra days.

Are you offering the best payment options?

Is your utility making optimum use of customer payment options? If you aren’t sure, please call me at 919-673-4050 or email me at gary@utilityinformationpipeline.com to learn how a business review can help you find out.

© 2025 Gary Sanders