Tips to Protect Against Check Fraud

In the movie, “Catch Me If You Can,” Frank Abagnale Jr. (Leonardo DiCaprio) is an American con artist who cashed $2.5 million worth of bad checks while impersonating a Pan Am pilot, a doctor, a teacher and an attorney. The movie is based on a true story. The real Abagnale Jr. was one of the greatest con men in modern history who exploited the check business with his high attention to detail. He is currently a highly respected expert on forgeries in the United States.

One would think check fraud is more detectable in our digital age and less prevalent with the decline of checks being issued but that’s not the case. Check fraud is on the rise. It’s essential to understand how this type of fraud works and how to protect yourself and your business from it.

What is Check Fraud?

Common check fraud includes the forging of signatures or endorsements, the alteration of payee names and dollar amounts, and the creation of counterfeit checks. Like other forms of financial crime, perpetrators look for companies that lack the people, processes, and technology to prevent losses. And, even with today’s technology, it can be difficult to tell whether a check is valid upon initial examination.

Types of Check Fraud

Counterfeit Checks

You would be hard-pressed to tell the difference between a counterfeit check and a real one. Almost any kind of check can be counterfeit. Criminals use counterfeit checks in several different ways to steal funds from your account. Sometimes, they use the checks to pay for merchandise, leaving your business to pay the bill. In other cases, counterfeit checks are a more elaborate scheme, involving overpayments and cashback requests that can leave your business out thousands of dollars.

Altered Checks

Like counterfeit checks, altered checks can be used by criminals to pay for goods and services. They can also be deposited, with cashback provided. If your business uses checks, you have the threat of having someone steal those checks and alter them to look as though the check was written to them instead of the true payee. Altered checks can also be falsified to show a different amount than what you authorized the check, such as a $100.00 check clearing your account as a $700.00 check.

How to Protect Your Business

If ceasing to use or accept checks in your business is not an option, there are other ways to prevent check fraud from impacting your business.

• Keep your checks locked up. Make sure they are only accessible to authorized employees in a secure location. Pay attention to check numbers and immediately investigate any out-of-sequence checks. Contact the financial institution as soon as you recognize something is off. Time is of the essence when it comes to check fraud.
• Always check ID when accepting a check. The ID should always match the name on the check. There are no exceptions to this rule.
• If you’re mailing a check or other mail that contains sensitive information like account or Social Security numbers, we recommend you go inside the Post Office to mail your documents rather than using the blue mailboxes outside of the Post Office.
• Sign up for Positive Pay. One of the most effective forms of defense against check fraud, Positive Pay is an automated fraud detection service. It matches the account number, check number and dollar amount of each check presented for payment against a list of checks previously authorized and issued by your company. All three components of the check must match exactly or it will not pay.
• Sign up for ACH Positive Pay. This online fraud service allows you to manage ACH debits and credits posting to your business account via filters and blocks.
• Sign up for Dual Approval. Dual approval requires two separate people to authorize a transaction. When each person has signed off on a transaction, it can be set into motion.
• Sign up for User Management Tools. Your employees each have different access and authority levels in your business. User Management Tools mirror those roles in your Online Banking platform. You can grant individual users’ permission at every level. You control which accounts they can see, as well as the dollar amounts, they can approve, accept or transfer.

At CommunityAmerica, our top priority is providing you with the information and resources needed to keep you, your financial accounts and your personal information secure; while providing assistance in regaining control of a compromised account.

If you’re interested in signing up for CommunityAmerica’s fraud service products or if you would like to view a demo, contact the Commercial Treasury team at [email protected]. If you notice any suspicious activity related to your CommunityAmerica accounts, please contact us as soon as possible via 913.905.7000 or [email protected].