Check fraud is a relatively common problem that plagues every financial institution and business at some point (or many points) during their operation. Counterfeiting schemes and check fraud is an industry all its own worth billions. Consequently, it takes constant vigilance and effort to combat this problem. Businesses and individuals alike can better protect themselves, however, by understanding the nature of check fraud.
Forged signatures on checks are a common problem that both businesses and individuals face. In many cases, it's a disgruntled employee that takes a blank check or cashes one that should go into the business. In some cases, blank checks are stolen from individuals and thieves that simply forge signatures to obtain the funds they want. Many people now opt to pick up their blank checks from the bank and avoid having them sent in the mail so that their checks don't wind up in the wrong hands.
Counterfeit checks have become an increasing problem worldwide. Counterfeiters have gained access to sophisticated tools that allow them to copy valid checks. In some cases, counterfeiters can simply scan used checks and use their software and printers to change some of the information on the checks. They can then print out the checks exactly as they wish. Unfortunately, nearly any type of check can be counterfeited. This remains a serious problem for law enforcement agencies to keep in check.
Sometimes checks are altered to show higher amounts that can be cashed. Check altering is a crime, of course, but it has been on the rise. Checks can be altered in numerous ways in the law-breaker's favor. Depending on the nature of the alteration, many may even go unnoticed by the business or their accountants until close scrutiny is made.
Spotting a Bad Check
Businesses must get to know the signs of a bad check. In many cases, businesses should look more closely at checks that do not have a perforated edge. This is sometimes, though not always, a clue that a check may need further investigation. Inconsistent routing numbers can also be a sign of a counterfeit check. The bad routing numbers lead to a delay that buys the counterfeiter more time. Inconsistencies in the appearance of the check should also be a warning sign.
Coping with Check Fraud
Businesses must take steps to train their employees about spotting bad checks. Financial institutions regularly instruct their staff about check fraud and how to spot it. Many banks now work with software that can help spot counterfeit checks. Using checks with watermarks is a great way to stop counterfeiters in their tracks as these marks cannot be duplicated by a printer. Microprinting is another great deterrent that prevents counterfeiters from illegally copying checks.
Guarding against bad checks is something banks and businesses must take seriously. Finding out about new technology that can safeguard checks as they are printed is one key to stopping check fraud. Banks also network to share information about bad check schemes which frequently travel from one region to another. All of these tips, taken together, can help you spot and reduce check fraud faced by your institution or business.
"Check Fraud Federal Reserve System", BusinessIDTHEFT.org, http://www.businessidtheft.org/Portals/0/Docs/FRBCheckFraud.pdf
"MICR Printers", TROY Group, http://www.troygroup.com/products/printers/micr_printers.aspx