Think check fraud doesn't affect you? Think again. According to the iSMG, 2013 Faces of Fraud: The Threat of Evolution survey, 52 percent of organizations have experienced check fraud in the past year. Checks experienced the second highest level of fraud right after credit cards. What's more, the 2013 Federal Reserve Payments study found that checks had the highest average value of unauthorized transactions in 2012 at $1,221. In contrast, credit cards averaged just $138.
If your business hasn't been affected by check fraud, brace yourself. With over half of all businesses affected last year, it's not a question of if but when. Though the odds are not in your favor, you can take matters into your own hands by taking a proactive approach.
According to the Troy Group, many companies have successfully used chemically sensitive security toner, indelible ink, color shifting ink, watermarks, fiber lifting paper, and other TROY security features to combat check fraud. For example, one of its customers, a $6 billion international industrial manufacturing company switched to TROY MICR Security 9000/9050 toner to prevent check fraud after losing over $140,000 in a single occurrence of check fraud.
Common Check Fraud Techniques
In order to prevent check fraud, you need to know how fraudsters do it. Below are a few of the more common forms of check fraud:
Theft - Paper checks are vulnerable from the moment they are printed to the moment they are cashed.
Alteration - Checks are often altered. In some cases, chemicals are used to bleach the ink; in others, it may be a simple matter of adding a couple of zeroes to a number.
Desktop publishing - Copiers, scanners, computers, and color printers are often used to print fraudulent, but realistic-looking checks.
Internal check fraud - As much as you'd like to believe in the honesty and integrity of your workforce, inside jobs can and do happen.
Preventing Check Fraud
Here's how to prevent common forms of check fraud:
Write fewer checks. Direct deposit and electronic funds transfers can decrease the number of checks you must write.
Use locked printer trays and mailboxes. A locking printer tray ensures that checks are protected once they are printed while a locking mailbox adds security while the checks are waiting for the postal carrier to arrive.
Stop using pre-printed check stock. Pre-printed check stock is vulnerable while it is in transit to you as well as while it's stored at your office. Instead, print your own checks using MICR toner and high security blank check paper. This step alone can prevent many forms of check fraud including stolen blank checks, altered checks, and check scanning/copying.
Implement secure check printing procedures. For example, instead of designating one person to write and print checks, authorize one to create the checks, and another to print them. If you want to take it even further, assign a third person to unlock the locked printer tray.
Use security toner - In addition to using high security blank check paper, use security toner to print your checks. This toner bleeds a red stain if alteration is attempted.
Check fraud continues to plague businesses of all sizes. Are you willing to wait and see what happens or would you rather prevent it from happening in the first place?
"Information about Check Fraud", stopcheckfraud.com, http://www.stopcheckfraud.com/statistics.html
"Document Fraud Prevention", TROY Group, http://www.troygroup.com/products/printers/document_fraud_prevention.aspx