Check Fraud: It's back and smarter than ever.
Some thought check fraud was a thing of the past. Unfortunately, it's not. According to an Association of Financial Professionals (AFP) survey, 63% of businesses were impacted by check fraud in 2024. Despite the decreased usage of checks, this trend doesn't seem to be slowing down.
Check fraud remains a popular choice for criminals, and advances in technology have made it even faster and easier for them to counterfeit and alter checks.
How does check fraud begin?
Often, the cause is mail theft, such as a paycheck left in an unsecured mailbox, vendor payments stolen in transit, or essentially any check they can get their hands on. Criminals frequently target checks mailed to vendors, payroll providers, or government agencies.
Criminals use these stolen checks to create altered or counterfeited versions. They may wash the checks to remove the ink so they can alter the information. New technology allows this process to create altered checks that look nearly identical to the real thing.
Signs of check fraud:
- Your vendors/payees report late or unreceived payments.
- Checks clear for amounts or payees that you don’t recognize.
- Checks are missing.
Simple steps to protect your business:
Avoid using checks.
Add Positive Pay to your checking accounts.
- This is one of the best defenses against check fraud.
- Here's how it works: You provide the bank with a list of approved checks. We compare the check number, amount, and payee information to the checks coming in for payment. Unauthorized or altered checks are flagged before they hit your account so they can be stopped.
- Without Positive Pay, your funds could be withdrawn before you detect a fraudulent check, and recovery is not guaranteed.
Review your accounts daily.
- Staying on top of your account is one of the best things you can do. Make it a habit to check your account activity and check images every day using online or mobile banking. Generally, you only have 24 hours to return a fraudulent check, so you need to act fast.
Investigate missing or altered checks immediately.
- Don't wait for a check to turn up. Don't ignore small changes. These could be the start of major problems for your business.
Use black pigment-based gel pens.
- Don't use just any pen to write your checks. Gel pens hold up better against check washing, making it harder to alter your checks.
Fill out all of the check fields.
- Leave no blank or empty sections. Draw lines through all the fields you are not using.
Use secure indoor mail drop boxes.
- Outdoor mailboxes are often targets of mail thieves. Instead, use drop boxes inside the post office or hand mail directly to your carrier.
If you suspect that you've been a victim of check fraud, contact the bank immediately. The sooner check fraud is reported, the greater the chance of stopping and recovering the funds.
Talk to your Treasury Manager today about how, together, we can reduce your risk of check fraud.