Check fraud is more common than you might expect. It costs businesses and banks millions each year. It is also a major hassle canceling checks, closing accounts, and reissuing new payments. Not surprisingly, businesses need to take check fraud seriously. If you are caught sleeping on the job, your bottom line will take a significant hit. In this article, we are going to look at how you can prevent check fraud from damaging your business.
Do People Still Write Checks?
Even though financial services technology such as that offered by Deluxe Financial has made it easier for businesses to accept payments via smartphones and over the internet, people do still use checks to buy goods and services. Also, many smaller businesses still accept checks as payments because a lot of their customers are elderly. In addition, bear in mind that making a credit card payment often incurs a charge, whereas writing a check costs the customer nothing.
Different Types of Check Fraud
Fraudsters have plenty of imagination when it comes to check fraud and the old ways are often the most successful. Your business may see counterfeit checks, checks with a fraudulent signature, checks issued on a fake account, and checks that have been fraudulently altered to benefit the payee.
People use check fraud to obtain goods and services by deception. They take advantage of a business that accepts payment via check by writing a check for goods and disappearing with those goods before the check is flagged as fraudulent. Scammers also like to try cashing fraudulent checks, so they can walk away with the money before the check bounces.
Check fraud is perpetrated by individuals or criminal gangs. It can be a professional fraud or an amateur shakedown of a small business. Either way, without the right procedures in place to detect the fraud, the damage is done.
The Warning Signs
There are usually several warning signs that you can look for. The more red flags you spot, the more likely you are to have a dud check in your hand.
Look for signs that the check has been altered in some way. If the signature looks odd or it appears as if extra information, such as new noughts, has been added, be suspicious.
Checks that are drawn on a new account, but for a large amount, are high-risk.
Checks printed on poor-quality paper with ink that looks fresh are likely to be fake.
Make sure the information on the check matches the person issuing the check. If there are any discrepancies between the name, account number, and the person’s ID, or if a corporation check is being cashed by an individual, be suspicious.
Check fraudsters will often try and bamboozle cashiers by presenting fake checks at busy times, so the cashier is under pressure to move the queue along. They might act in a belligerent manner or cause a fuss to force the cashier to bypass security procedures. This is something that good training and experience can eradicate.
Have internal procedures in place to minimize check fraud and consider switching to electronic payments instead.