6 Ways To Avoid Check Fraud

Since the invention of the check, people have beenthe portrait on the face of one of the newly designed
constantly inventing new ways to pass fraudulentUS bills and you will see the border that appears to be
checks. The National Check Fraud Center estimatesa line is actually comprised of words. Even modern
that 1.4 million fraudulent checks are written each day,high resolution printers cannot reproduce type this
costing businesses over ten billion in losses annually.small.
Fraudulent check writers have found a friend in newChemically Reactive Check Paper - A common way
technology such as color copiers, high resolutionto deface a check is to use chemicals to remove the
scanners and magnetic or MICR toner. MICR standsexisting writing to change the amount or to whom a
for Magnetic Ink Character Recognition, and it refers tocheck is written to. Chemically reactive check paper
the magnetically encoded line at the bottom of eachwill change colors when it comes in contact with
check. Traditionally, this line could only be printed with achemicals or solvents making the check unusable.
highly specialized magnetic ink on an offset press.Watermark - Check paper with a true watermark will
However, with the advent of MICR toner and desktopshow up when held up to the light. A watermark will
laser printers, anybody with the right software, an HPnot be visible on a copied or scanned check.
LaserJet printer and blank check stock can print aListing of security features - A good check stock will
check.list the security features on the back of the check.
As a business owner, you and your company areWhat good is a security feature if no one knows what
susceptible to check fraud; however, there are wayssecurity features to look for?
to guard against it. Here are 6 steps that you and your3. Positive Pay File Transmittal - A great way to stop
business can follow to successfully defend againstcheck fraud is to generate a positive pay file and
check fraud.transmit it to your bank. Every time you print a batch
1. Print Your Own Checks - Real Time - The mainof checks, you transmit a positive pay file listing the
benefit to printing yourself is security. Traditionally achecks and their amounts to your bank. If a check
business orders check stock from a company likeamount is altered or a check is duplicated the bank will
Harland or Deluxe and they put the checks in a supplyreject it because it does not match the positive pay
room or closet. These unused checks are a goldminefile. Positive pay is fairly common in large companies,
for any disreputable person that runs across them - allbut a small company may not have the resources or
they have to do is grab a check from the bottom ofthe software to produce the file and transmit it.
the pile, remove it. In all likelihood, you'll never know thatContact your bank about this service.
last check is missing until at least a month later, and4. Check Storage / Access - One key to avoiding
that's if you are lucky and you regularly reconcile yourcheck fraud is eliminating, or at least, decreasing
check book and examine each transaction. We knowaccess to documents with your bank account number
because that's exactly what happened to us.on them.
In 1993, we had an employee that unwisely stole theMail Theft - Mail theft is a very common way checks
last page in our check book. We never knew theyare stolen - make sure your outgoing mail is not left in
were missing. Our Ex-Employee filled them out toa place where anybody coming and going can steal
herself and passed them as payroll checks at a usedthem. A secure mail box is probably the best way to
car dealer. She did get that car and several weeksprotect your mail.
later my partner's wife noticed the unusual checks.Check Storage - If you are using preprinted check,
Had she not noticed the problem who knows howstore checks in a secure area under lock and key.
much more money would have been stolen beforeNever leave checks unsecured.
we got wise to it. Long story short the bank had toDocument Storage - In addition to securing checks, be
eat the bad checks and they wasted no time makingsure to secure all documents containing your bank
sure the case was prosecuted to the full extent of theinformation. They contain all the data necessary for a
law. We were lucky and it only cost us time. Had thefraudulent check.
employee been authorized to sign checks we wouldDocument Disposal - When disposing of banking and
have lost the money.credit card documents, shred them. A shredder is a
By printing your own checks you only stock blankcheap and easy way to make sure some dumpster
check stock and a MICR toner cartridge. There isdiver doesn't steal crucial information that might be
nothing to steal with your account information, theyused to create fraudulent checks. We use a shredding
have nothing but a piece of blank check paper. Ofservice. The service provides locking cabinets to store
course you are still open to a new kind of fraud ifthe documents to be shredded. Then once every two
someone is able to access your check printingweeks the shredding service comes by and actually
software. Be sure it's password protected and yourshreds the paper onsite. The shredding truck has a
network rights are setup so that ordinary users can'tmassive shredder on the back and our documents are
access the directory that it resides in.shredded before the truck leaves our site.
Another great benefit of printing your own checks real5. Electronic Payment - The only way to entirely
time is that if you move our change bank accounts,eliminate check fraud is to eliminate checks. Check
you lose nothing. Just edit your address or accountprocessing is very costly for banks and they would
numbering in your check printing software and you'velove nothing more to eliminate checks all together. With
made the switch - No wasted checks, no wastedthe advent of EDI (Electronic Data Interchange) many
money, no waiting for new checks.large companies such as Home Depot only deal with
2. Buy Secure Check Stock - When selecting a blankvendors that can send invoices and receive payments
check stock, make sure the check stock is loadedthrough EDI. Electronic payment is definitely the future
with security features - this will make it difficult for aand individuals are flocking to electronic payment, but
scammer to copy or scan the check. Recently the USbusinesses are still slow to make the transition. Most
treasury department spent millions adding securitybusinesses write their checks through accounts
features the newly redesigned notes. Many of thesepayable software, thusly don't have an easy or
same security features are now available for checkstandardized way to effectively transmit payments
stock. Here are some security features to look for inelectronically. However, in time software will catch up
check paper:with technology and electronic payment will become
Copier Void Pantograph - This causes the word VOIDthe standard. Electronic payment is already available
to appear in the background of a check when copied.through QuickBooks and it's only a matter of time until
A Void Pantograph is created by engraining a precisionbusinesses adopt this practice to make payments.
pattern of lines and dots in the background of the6. Pay Attention - You may follow all of the above
check. The printing of the pantograph is so precise thatsteps and still somehow get scammed. Paying
the VOID is not visible to the human eye, but whenattention to your bank and credit card statements will
copied or scanned they appear making the copiedhelp you detect any discrepancies earlier. The earlier
check useless.the problem is detected, the more likely that you will be
Micro Printed Border - This same technology is usedable to catch the culprit and regain your hard earned
on new US currency - magnify the border line aroundcash.