Common Forms of check Fraud

Many people think the days of check fraud are long over with. After all, technology is at a point where it’s hard to do anything illegal with a check, and banking systems have long upgraded their methods of dealing with checks. However, check fraud still exists and it persists.

These days it seems like it’s much easier for those with ill intent to go for sophisticated credit card theft and debit card spoofing. And indeed, they do that as well, but check fraud is still a major criminal activity.

That same advancement in technology is what actually helps check fraud to flourish. Advanced printers, and desktop publishing software has allowed for the creation, alteration or manipulation of checks. As technology attempts to hinder the process, it also facilitates the process as well.

For those that order and deal with checks on a regular basis, it’s important to understand a little about how people commit check fraud.

Methods of check fraud

At a basic level, there are only a few ways to commit check fraud.

  • Altering – This involves changing the information on a legitimate check through various means. Since it’s still a real and official check, it can pass through where other types may fail. There are various ways to alter a check, from simply writing on it to using complex chemical methods. A person attempting to alter a check may only attempt to change small specific parts of the check, or they may wash the check of all information and rewrite what they want in.
  • Forgery – This is an old scheme that still works to facilitate check fraud. All someone would have to do is get his or her hands on a check and sign it. Once signed, they can use it. The only real thing holding a criminal back in the case of a forgery is a lack of identification to go along with a check. But there are many places that will accept a check without ID, especially online if they use the information from the physical check as a digital check.
  • Counterfeiting – It’s still possible to make fake checks. Depending on the criminal’s intent, they can even make fake checks with completely made up information. Or they can use stolen information to create them.
  • Bouncing – People will still do nothing more than use a check somewhere knowing that it will bounce. While many legitimate account holders may do this for various reasons, it’s still a form of check fraud. Criminals can take advantage of it as well. All they would have to do is to write checks against an account using any check fraud methods. If they can find places that will accept the checks, they can spend as much as they want on goods and services and get away before the checks bounce.

check fraud and businesses

For a business that deals with checks, there is a great risk involved when employees or others must handle the checks and information of others. While banks and retail institution do their best to make sure that fraudulent check practices never make it through the gate, businesses also have to take steps to prevent check fraud as well.

A lot of check fraud can start inside a company, with employees that process a lot of checks. That’s why it’s important that businesses discourage check fraud from within through policies such as instant dismissal or taking legal action.

Business owners should also educate both their employees and client base about the dangers associated with using checks and suggest some simple check fraud prevention techniques such as:

  1. Keep your checks under lock and key when you aren’t using them
  2. Report stolen checks immediately
  3. When accepting checks, ask for ID
  4. Always compare the signature on the check to that on the ID
  5. Know how to test for security features built into checks
  6. Put limits on the amount a check can be written for, and
  7. Use a check verification service

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