Protect Your Business from Check Fraud: How to Spot and Respond to Threats

In today’s rapidly evolving financial landscape, businesses face numerous challenges, with cybercrime being a significant concern. Among the various forms of financial fraud, check fraud continues to be a prevalent threat. As we recently addressed in an urgent email to our bank business customers, it is crucial to stay vigilant and take proactive measures to safeguard your business against these malicious activities. In this blog post, we will delve deeper into check fraud, discuss how to spot potential red flags, and outline the necessary steps to take if you suspect fraudulent activity.

Understanding Check Fraud:

Check fraud is an umbrella term that encompasses a range of deceptive practices involving checks to unlawfully obtain funds from businesses. Fraudsters utilize various tactics, such as forging signatures, altering check amounts, or creating counterfeit checks resembling legitimate ones. These criminals often prey on businesses, where larger transactions and higher check volumes can make detection more challenging.

Spotting Check Fraud:

1. Missing Check Numbers: Regularly review your issued checks and ensure no check numbers are missing. Fraudsters may target unused check numbers to create counterfeit checks.
2. Altered Check Information: Check for any signs of tampering, such as changes to the payee’s name, check amount, or date. Be cautious of faded or irregular ink, erasures, or visible corrections.
3. Suspicious Endorsements: Investigate any checks with suspicious endorsements or signatures that appear inconsistent with the payee’s usual signature.
4. Unrecognized Transactions: Regularly monitor your account for unfamiliar transactions, particularly checks with unusually large amounts or those not initiated by your business.
5. Duplicate Checks: Keep track of your issued checks to identify any duplicates that may indicate unauthorized transactions.
6. Unusual Check Origins: Be cautious of checks received from unknown sources or unexpected individuals, especially if they claim to represent legitimate companies.

Responding to Check Fraud:

1. Act Promptly: If you suspect check fraud, take immediate action. Notify your bank and the involved parties, including the payee and any relevant authorities.
2. Record Details: Document all relevant information related to the fraudulent check, such as the check number, amount, date, and any accompanying documents.
3. Communicate with Your Bank: Inform your bank about the suspected fraud and provide them with the necessary details. Banks have a 24-hour timeframe to resolve check fraud cases.
4. File a Police Report: Report the fraud to your local law enforcement agency, providing them with the evidence and information you have gathered.
5. Secure Your Accounts: Temporarily close or restrict the affected account until the issue is resolved, and implement additional security measures, such as Positive Pay services.
6. Educate Your Team: Ensure that your staff is aware of check fraud risks and knows the proper procedures to follow in case of suspicion.

Protecting your business from check fraud requires vigilance, education, and proactive measures. By staying informed about the latest fraud trends and implementing security practices, you can significantly reduce the risk of falling victim to fraudulent activities. Remember that early detection and swift action are crucial in minimizing the impact of check fraud on your business. As your trusted bank, we are committed to assisting you in this endeavor, providing the necessary support to keep your finances safe and secure. If you have any concerns or questions regarding check fraud or account security, please do not hesitate to reach out to us. Together, we can strengthen the resilience of your business against financial threats.