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You Should Definitely Learn How to Keep Your Business Protected

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Yes, Check Fraud is Dangerous. And Yes, You Should Definitely Learn How to Keep Your Business Protected

There’s no denying that even in today’s digital world, thousands of businesses are still using printed checks. There are several reasons for this, such as the ability to postpone withdrawals, paying people who don’t have bank accounts, or for the simple reason that many people – especially older people- just prefer using checks due to their familiarity with the system.

Through the years, banks and other major financial institutions have regularly updated their checks in terms of design and features. Part of the reason is to ensure that the checks have a modern and appealing look, but the majority is for security purposes: checks are regularly changed and updated to help combat check fraud.

What is Check Fraud?

Check fraud is the criminal act of using checks (whether manual or printed) to illegally acquire funds. These funds can either be stolen from other people or non-existent funds can be “borrowed” within an account. Check fraud generally works because there is a floating period; a space of time where funds can be accessed without the check actually clearing to see if it is legitimate.

There are two general ways that check fraud is committed. The first is through the actual creation of a fake check or the duplication of a legitimate check that corresponds to a legitimate bank account. The second is through the chemical manipulation of a legitimate check to make it beneficial to a fraudster, such as changing the name of the payee or the value amount of the check.

How Does Check Fraud Begin?

The problem with trying to stop or even control check fraud is that it’s so easy to commit. All a fraudster has to do is steal your financial information, and there are so many ways to do that! They can steal your checkbooks from your home or car, search through your garbage, or even steal your checks out of your mailbox just to get their hands on your sensitive information. In fact, people are so careless with their personal and confidential information that it’s actually shocking.

Types of Check Fraud

While there are many types of check fraud out there, here are some of the most common ones that you should watch out for:

  • Forgeries – this is the most common type of check fraud. A fraudster simply has to create fake checks with your account number and routing number, and print out as many checks as they want.
  • Chemical washes – as mentioned above, this method involves using chemicals to change the information written on a check to make it favorable to a fraudster. They can put their name and desired amount in place of the legitimate information, and since the check itself is legitimate, it might clear if your bank doesn’t have stringent fraud detection policies in place.
  • Paperhanging – fraudsters would purposely write checks on closed accounts and hope that it clears before the bank finds out that the funds are non-existent.
  • Photocopying – this is the easiest type of check fraud to commit. A fraudster would literally photocopy a single legitimate check multiple times and submit it to different banks.

Can My Business Be a Target for Check Fraud?

If you are using checks for any kind of financial transaction, whether it’s to pay bills, accept payments from customers, or to pay suppliers, then YES. Your business can be a target for check fraud. However, this does not mean that you should allow your business to be vulnerable to it. You can take steps to protect your business from check fraud.

Keep Your Checks in a Secure Location:

This might seem like a no-brainer, but no matter how much you trust your employees, it does not hurt to be cautious. Never keep your checks lying around especially in obvious locations such as your work station. Keep an office safe, or better yet, keep them at home and only bring as many as you need for specific transactions.

Use Printed Checks:

Manual checks are generally easier to forge and manipulate compared to printed checks simply because of all the built-in protections that printed checks have. You can buy QuickBooks checks for business if you’re considering using printed checks. QuickBooks is already accepted by thousands of merchants and financial institutions around the world.

Invest in Check Fraud Protection Tools:

You can purchase a fraud protection tool such as Positive Pay, which is an automated check fraud detection tool that is used by most commercial banks around the world.

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