How to Prevent Check Fraud

With the widespread availability of high-quality digital printing equipment, it's unfortunate but true that it is now easier than ever for a criminal to commit check fraud. To protect yourself and your business, it's essential that you take steps to prevent check fraud so that it doesn't take a bite out of your bank account.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Check-cashing system software

Protect Your Personal Account

1. Ensure that the checks you use have security features designed to prevent fraud. Look on the back of one of your personal checks to find a list of security features, and contact your financial institution to see if checks with additional features are available.
2. Keep your checkbook in a safe place at all times. If you receive cashed or canceled checks back from your bank, make sure you keep them locked up in a safe place, not just sitting around your home where someone could find them.
3. Do not put more personal information on your checks than necessary. Under no circumstances should your credit card number or Social Security number appear anywhere on your checks. In fact, it's even a good idea not to include your telephone number as part of your personal information.
4. Do not make your checks payable to cash, and do not sign a check until you're in the bank and ready to cash it. If your checks are payable to cash and are stolen, anyone who gets his hands on one can cash it without difficulty. If someone steals a check you've already endorsed, the money is as good as gone.
5. Flip through your checkbook when you get new checks from your bank to make sure that the check numbering sequence is not broken. It should be continuous, with no missing numbers. If a check is missing, call the bank right away and have any check bearing that number canceled.
6. Use a colorfast pen. Ballpoint pens and pens that use marker ink can be washed. Instead, use a gel pen--the color is actually trapped in the dye of the paper, making check washing impossible.
7. Never leave blank spaces in the "Pay to the order of" or "Amount" fields of your checks.
8. Mail all checks at a mailbox. Don't leave them sitting in your home mailbox for a letter carrier to collect. The wrong person might get her hands on sensitive information if you simply leave it sitting out in the open.

Protect Your Business

9. Prevent check fraud by creating and instituting a strict policy regarding checks at your place of business. Better yet, make it so customers cannot pay with a check. That will ensure that you'll never deal with check fraud.
10. Train your staff to double-check the ID of anyone trying to pay by check at your place of business. In particular, your employees should make sure that ID used to verify a person's identity is valid, not expired, and bears the same address information that appears on the check itself.
11. Refuse third-party checks. If an individual has a check endorsed by a third party that he attempts to use to pay you for goods or services, do not accept it. This is one of the most common fraud ploys that criminals use.

Tips & Warnings

• If you operate a business that receives a high volume of customer checks, consider implementing a computerized check-cashing system. You can use this to access a customer's checking history and spot problems before they start. Check out the Secure Check Cashing system (see Resources below).