At Risk: Check Fraud. Trending Away from Checks

Laptop Graphic         Cash graphicChecks are slowly becoming extinct for many reasons, but fraud is a leading cause. Check Fraud occurs when someone steals your actual checks or reproduces them and is able to cash those checks, pulling money out of your bank account.

Because resolving check fraud can be stressful, time consuming and costly, the best solution is to avoid sending checks.

The convenience of online bill payment and the fact that it is more reliable makes it the number one choice of how to avoid fraud.

Reduce your chances of becoming a victim.

A check is a treasure trove of information for thieves. What’s printed on the front of your checks—names, addresses, the banking institution, the bank’s routing number, and the check holder’s account number—is valuable data to a thief. With access to this information, thieves can steal your money.

A significant amount of check fraud is due to counterfeiting through copying to create or duplicate an actual check, as well as chemical alteration of an original check, which consists of removing some or all of the information on the check and manipulating it.

How bad could it be?

There is nothing to be done once identity theft occurs or an account is compromised. The account should be closed, causing a huge disruption in your business. But worst of all is that when there is a dispute over fraudulent transactions, it’s your money that’s missing, not the bank’s. There are no legal protections when it comes to checking account fraud. You’ll find yourself fighting to get back the money that was originally in your account, while previously written checks bounce and you incur overdraft fees.

Checking account holders have only two business days after receiving their statement to report fraudulent transactions, or they could be liable for up to $500 of those transactions. If a victim fails to report fraud for more than 60 days after receiving a statement, they might be liable for all the money missing from their account. This could mean serious financial hardship for small not-for-profits.

How can you protect your business?

If you must use checks, limit the number of checks you’re writing.

Auto-pay as many bills as possible online, so that the money is withdrawn directly from your account.

Find alternate ways to pay bills, such as credit card payments, money transfers, or platforms such as PayPal, Venmo or SmartPay.

Reconcile your bank statements every single month, within two days of receiving them.

Visit your bank account online frequently.

Report any suspicious activity or unfamiliar withdrawals immediately.

Sign up for bank e-statements. Keep your statements, and the account information they contain, out of the mail.

Keep blank checks in a secure location. Don’t leave checks on desks, or in other places where they might be easily stolen.

What about Mail Fraud?

When paying bills with checks via mail, don’t leave the check in an unprotected mailbox on a street corner. Drop it off at the post office. Don’t put mail in street mailboxes. The highest rate of mail theft is from those big, blue Postal Service mailboxes located on street corners and in other public places.

If you have had your mail stolen from your mailbox then you have become a victim of Mail Fraud, a federal crime. It is important to report this crime immediately and to take steps to protect your assets and credit rating.

Notify your local postal authority. Ask to fill out Form 2016, available at your local post office or by mail.

Call your local police agency. Report the theft to police or the sheriff’s department.

If you suspect the thief obtained a credit card, checks or bank statement, cancel your accounts immediately and notify creditors both by telephone and in writing.

If a check payable to you is stolen, ask the sender to stop payment and issue a new one.

Call creditors to avoid late payments, which could damage your credit rating.

Don’t forget other bill payments could be missing, such as an annual insurance premium, property-tax levy or income tax refund.

Better yet: avoid check or mail fraud. Don’t write checks. Don’t mail checks. Let technology work for you. You will save yourself and your organization a headache and more.





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