7 Check Fraud Protection Tips to Safeguard Your Money

Key Takeaways

• It is essential to recognize the early signs of check fraud. It can prevent costly incidents before they escalate.
• Check fraud has an impact beyond monetary losses. Your reputation will get tarnished, your credit score will decrease, and your productivity will suffer.
• Use a non-erasable gel ink and fill out the check in a manner that there is no blank space. It will prevent scammers from manipulating information.
• Train your employees to detect risk, follow secure processes, and immediately respond to any suspicious activity.
• Ensure the check has security features like watermarks and an MICR line. These elements will help protect it from forgery.
• You can automate check printing and mailing using the PostGrid Check API. It creates, prints, and sends them in a secure and compliant environment.

Write With a Non-Erasable Gel Ink

A traditional ballpoint pen uses an oil-based ink that is easier to dissolve, and the forgery is less detectable. This makes it easy for fraudsters to wipe out the existing information and add their details. To prevent chemical washing, use pigmented, high-quality gel ink. It bonds deeply with the fiber in a way that standard ballpoint pens do not. Fraudsters will not be able to erase the writing. Any attempts to wash it will lead to smudging the texts beyond legibility and visible damage to the paper.  

Best Practices:

1. Only use a black or blue gel pen, as banks universally accept them.
2. Standardize the pen usage across departments to prevent tampering.

Fill Out the Check as Fully as Possible

If your check has excess blank space, fraudsters can easily change its content, such as bank account information. They might add extra digits to the amount. For instance, changing $150 to $15000. To protect yourself from check fraud, you must fill in the details without any gaps. This will make it difficult for anyone to add new information.

Best Practices:

1. Make sure you draw the line through the leftover space.
2. When writing the amount in words, spell everything, including cents. In case there is some space, always add a line.

Use Positive Pay Systems

It is an automated check fraud detection service that helps prevent scams before the funds leave your account. When issuing checks, send the list with all necessary information to your bank. When someone presents the paper for cashing, the bank will use an automated machine to match the details against the list. In case of a mismatch, they will notify you. This will prevent you from honoring counterfeit pieces that might have slipped through the cracks.

Best Practices:

1. Ensure that you submit the file in real-time to keep the bank records up-to-date.
2. Always include all relevant details, such as the check number, deposit date and issuance date.
3. To further avoid becoming a victim, opt for Payee Positive Pay Service. It checks the payee’s name along with the standard fields.

Also Read: How to Enable Positive Pay with Digital Checks

Offer Training

Any fraud prevention technique will only work when the people deploying it are aware of the problem and solution. You must train your staff about how check fraud works. They should be able to recognize early warning signs and know how to handle them. They should know the mistakes they are making that are leading to the crime. It will create an atmosphere of shared responsibility. Employees will understand what is at stake, such as financial loss and reputational damage. It will also motivate them to handle sensitive financial information carefully.

 Best Practices:

1. Create training content specific to each department. For instance, your accounts department should know how to identify fake checks.
2. Familiarize employees with the internal policy of issuing and storing checks and what to do if they suspect fraud.
3. Conduct mock audits or phishing simulations to test whether or not the employees are prepared.
4. Keep them updated on the latest fraud techniques.

Use Checks With Built-In Security Feature

Such checks include design elements that are impossible to reproduce with a basic printer. Ensures the check has a minimum of five features, such as watermarks, holograms, microprinting, thermochromic ink, color-shifting ink, and void pantographs.  

Best Practices:

1. Always purchase from vendors that sell secure, bank-grade, compliant checks.
2. Periodically monitor your check security standards to comply with bank requirements.

Implement Strong Internal Controls

This involves clearly defining roles and segregating duties. It will protect you from falling victim to forged checks and unauthorized payments. Strong internal controls increase the chance of early detection and minimize financial damage. 

Best Practices:

1. Different individuals should be responsible for each step, such as approval, signing, mailing, and reconciliation.
2. Rotate responsibilities to look for any pattern of carelessness or misuse.
3. Integrate the accounting system with a tracking mechanism to know who initiated, reviewed, and authorized the payment.

Promptly Report Fraud

Timing is very important in recovering the funds and catching the criminal. According to the Uniform Commercial Code (UCC), it is mandatory to inform the bank about the fraudulent activity within 30-60 days of its occurrence. Missing this window gives the bank the right to deny the claim. Moreover, if you wait for a long period, the fraudster might make multiple transactions using the same information. By promptly responding, you can block access to the source. 

Best Practices:

1. Create a response team and train them on how to react if a fraud takes place.
2. In case of suspicious activity, immediately inform your bank and file a formal dispute.
3. Immediately report the fraud to law enforcement authorities, such as the Federal Trade Commission (FTC) or postal inspectors.

Manual check handling can be a cumbersome process that will leave room for fraud. This is why you should automate its printing and mailing using the PostGrid Check API. It guarantees the following:

1. Generating checks on a secure and cloud-based platform.
2. Adherence to the rules and regulations established by HIPAA, SOC-1, and SOC-2 ensures that sensitive information remains protected.
3. Using pieces with bank-grade security features like MICR lines, watermarks, holograms, and microprints.
4. Logging every issued piece and automatically updating your accounting software with the details.

With our solution, you can modernize your check handling process securely. To know more about it, talk to our sales team today.