Check fraud has become big business for criminals. Some will steal checks from dumpsters, mailboxes, and other places with easy access. Others will be a little more creative in order to accomplish their crimes.
For instance, some scammers will make counterfeit checks (making a new check that looks identical to a legitimate one that they have gotten their hands on), and others will do what’s called washing checks. This involves using chemicals to remove the ink where the name and amount on the original check is written. The criminals then sell copies of washed checks.
While we would like to think that bank tellers should catch all fraudulent check attempts, unfortunately that is naïve. Criminals replicating or changing checks have become very good at their craft, making the checks appear authentic. It would seem the answer would be to completely move away from issuing paper checks. There are reasons, however, that this is not always a feasible option.
If you do need to use paper checks for payroll or operating expenses, here are some things to consider:
- Use positive pay. This is an automated cash management service that banks can use to match checks written by a business with the check that is presented for payment. This way the check number, payee and amount can be compared and verified that there are no discrepancies. Reach out to your bank for more information.
- Many payroll services offer a service where the net payroll and taxes are deducted via a lump sum draft from your account on date of the payroll . The payroll service then issues the checks out of their account. This way, the responsibility and burden of fraud is shifted to the payroll company.
- Using a security seal or bar code on your checks might be another option. These contain the amount and payee information so that the bank can verify a check when presented for payment and notify you of any discrepancies or inconsistencies.
No matter what, regular review of your bank account activity is crucial in the timely identification of fraudulent activity. For example, you can do daily or weekly bank activity verifications. Waiting until a month-end reconciliation could result in excessive amounts of money stolen that could have been minimized through the process of regular review of bank activity.
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Tracy Young is a Director on our Client Service Team. She can be reached at firstname.lastname@example.org.