9 Ways to Prevent Check Fraud

The threat of stolen identities and bank account fraud is indisputable, but very few of us actually do anything to prevent it from happening. Here are 9 very simple steps that any business can take to reduce their risk of becoming victimized.

1. Secure Mailing- Instead of using a normal mailbox at your office, mail any outgoing checks in a secured postal box at the Post Office. This eliminates the risk of a “Mail Harvester” stealing your checks and selling them to a check forging ring who will then duplicate counterfeit checks with your account information.
2. Positive Pay- Banks offer a service called Positive Pay that allows them to catch fraudulent checks when they are presented for payment. They compare the presented check information (check number, amount, and payee) against a file they receive from you with information on all of the checks that you issued. If the information doesn’t match, it sends up a red flag. This service usually has a fee associated with it but in this case, the fee could be worth it in the long run. It also helps establish a fraud prevention partnership between you and your bank.
3. Check Security- Take time to compare which check stock actually has the most security features. The average check has only three or four security features but there are some that have eight or more. Using the correct stock will ensure that you are raising enough barriers to discourage a forger.
4. Toner Grip- Toner Grip is a special chemical applied to paper that chemically bonds the laser toner to it. When attempting to lift a printed character off of the sheet with tape, the actual paper fibers will rip away. This is an add-on for many check suppliers, but well worth the cost. However, there are some check suppliers who provide Toner Grip as a standard security feature and do not charge extra for it. Do some research into your vendors to find out who offers this product and at what expense.
5. Track Check Numbers- If using preprinted checks; assign a range of numbers to the users of your check stock. Make this person accountable for any lost checks and if you discover one is missing, issue a Stop Payment on that check number immediately.
6. Secure Your Check Stock- When your checks are not in use, it is imperative that you lock up your check stock, especially if they are preprinted with the check number and account information. Check stock can be easily stolen and passed off as an authentic check. Even if your check stock is blank, it is still good practice to guard your checks. Why expose your company to Attorney fees that would result in disputing a fraudulent check claim.
7. Secure Your Signature Plate- You would never sign your name to just any document but if your signature plate is stolen, your name can be attached to anything. Take measures to protect your signature plate because essentially it is just as important as your handwritten signature.
8. Reconcile Your Bank Account- The sooner that any fraudulent activity is reported to your bank or law enforcement, the better chance you will have in court. There is also the Repeater Rule to watch out for. This is when a forged signature is used repeatedly by the same offender and goes unreported for over 30 days after the bank statement was mailed out, the bank may not be liable for the losses. Be sure to reconcile your check distributions and deposits within 10 to 20 days after receipt of your bank statements.
9. Phishing Scams- Most banks tell you that they will never call you or send a letter or email asking for your account information. Be very suspicious of any correspondence you receive that asks for your account number or personal information. If there is any question in your mind, hang up and call your bank. If it is a website that you are questioning, look at the URL. If it is a secure site the web address will begin with https:// instead of the normal http://.

Notify your bank immediately if your business or company becomes a victim of check fraud. You will then need to close the account, destroy any old checks, and notify outstanding payees. If the perpetrator is an employee, additional measures will need to be taken such as filing a 1099 against them.