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According to the Association for Financial Professionals, 74% of organizations were targets of some kind of payment scam in 2020, and the most likely method of payment fraud is checks. While the majority of common fake check scams are meant to target consumers, businesses can fall victim, increasing the need to be educated about how to spot and stop check fraud.
Jacqueline Croft is the fraud and Bank Secrecy Act manager at Cornerstone Bank in Worcester.
Spotting a fake check
While scammers are becoming increasingly proficient in creating checks that look and feel legitimate, keep an eye out for these when accepting check payments:
- Confirm the check was issued by a legitimate bank.
- Ensure the payer listed on the check is the same as the individual or company you are dealing with.
- Check the phone number on the check matches the one on the bank’s website. Scammers will often change this in the hope someone will call the number on the check if they have questions or concerns.
Official checks usually contain watermarks, security threads, color changing ink, or other security features. While scammers can replicate these, they often are poorly executed or don’t look quite right.
Verify the check is for the right amount. Oftentimes, scammers will write the check for more than the amount they need to pay, hoping they will be reimbursed the difference before the business realizes the check is a fake. All employees who are authorized to take payments should be trained to spot fake checks and speak up if they see something looks off about a check payment.
Protecting your business
Not only can businesses receive fake checks, but they can be the victim of forged, altered, or counterfeit checks. Scammers do this by forging signatures or endorsements, altering the payee’s name or check amount, or even creating counterfeit checks.
Businesses should establish strict policies and procedures regarding checks, including who can issue them, requiring dual signatures for large checks, and designating one individual to respond to bank inquiries. And while checking writing may be easy, other ways to make payments can minimize risk, including wire or electronic payments.
Many banks, including Cornerstone Bank, offer a service called Positive Pay, which is a fraud-protection system matching checks a company issues with those presented for payment, sending back any that need to be reviewed by the issuer. This allows the company to determine if the check is legitimate and protect themselves from any potential counterfeit or fraudulent withdrawals.