Types of Check Fraud

Depending on the types of check fraud, there are actions that we can take to reduce check fraud risks. Consumers and businesses face a variety of check frauds which can affect each other. It is estimated that annual losses due to check fraud are in the billions of dollars and continue to grow steadily as criminals continue to override check control improvements in the banking industry. Check fraud has a direct impact on a consumer’s ability to access cash funds and pay for minimum life necessities because cash is taken out of the account which limits purchasing power and second, it takes some time for the entire process to flow through such as discovering the fraud, contacting the bank, investigation, approval of the credit and posting of the credit to the account. As consumers and businesses, we can do certain things to help prevent, detect and resolve check fraud and other times such as counterfeit checks produced with information obtained from sources unknown to us, there is not much that we could do. Let’s go through some of the common fraud types and discuss solutions.

Types of Check Fraud and Solutions 

Secure the blank checks - One common check fraud is the unauthorized use of legitimate checks. Employees, relatives, friends, and others who have access to blank checks can use the checks to take cash out of the victim’s account. To prevent this type of check fraud risk, it is important to secure the blank checks and only allow authorized individuals to access the checks. The timing of check fraud detection is very important because fraud may be detected as soon as it occurs if the accounts are not monitored o detect unauthorized check writings.

Don’t sign the checks – When checks are stolen, criminals have to forge the signature of the check owner. First, they have to know the signature style, and second, they have to forge it well to be undetected by the banks. Therefore, you should not sign the checks in advance before you are ready to deposit or surrender the check. If the signed check is stolen and deposited, the banks would assume it is an authorized check because the signature matches the signature card in the bank which was created when you first opened the account.

Update the signature cards –Sometimes, authorized account holders according to the bank may be unauthorized according to you. Always make sure that the list of authorized users and signature cards are updated with the banks. For example, you might get married and decide to add your spouse to the account, or, you might get divorced in which case you should remove your spouse from the list of authorized signers for the account checks.

Discard checks carefully – Check counterfeit is made possible with information stolen from cancelled, blank and endorsed checks. Always make sure that unneeded checks are shredded at home and the office. Dumpster diving is a coon practice to steal personal information from businesses and homes to commit fraud.

Read another article about types of check fraud and solutions.