How Your Business Can Prevent Check Fraud

The rumors of the death of paper checks have been greatly exaggerated. A 2016 article in the Washington Post noted that 97 percent of small businesses still use checks to make and receive payments. In addition, many larger businesses also use paper checks, including schools, medical offices, and building firms. For these businesses and others that still use checks, preventing fraud is a key concern. The following strategies can help reduce the risks.

Share Accounting Duties Within Your Organization

Image via Flickr by Cydcor

It’s disturbing to note that check fraud often occurs within an organization. You can minimize the risk of internal fraud by sharing your accounting duties among many employees.

Do not trust any one employee to oversee a financial transaction from start to finish. Get different people to write and sign your checks. The person who records your receivables shouldn’t be the same employee who opens the account department’s mail or who reconciles the accounts. When workers can check and double-check each other’s work, the chance of internal check fraud occurring is greatly reduced.

As an extra layer of security, you should be the one to receive your business’s bank statements. Evaluate each line of the statement, paying careful attention to the details of all checks written.

Carefully Inspect All Checks Received

Modern checks have a number of security features that are difficult to replicate on an ordinary printer. Encourage your workers to look for these features when receiving checks from customers.

Many have microprinted words, which appear like lines until you look closely. Heat-reactive markings that fade under the pressure of touch, but reappear seconds later, are also common. You’ll also usually see checks with holographic seals and intricate designs on the back.

Most personal checks don’t have all these features, but if you can’t see any of them, there’s a good chance the check is fake. Finally, look for a padlock on the front of the check, next to the amount line. This denotes a check meets the Check Payment Systems Association standard for security.

You’re well within your rights to refuse any check you suspect is fraudulent. Remember, banks can also refuse checks that don’t meet minimum security standards, so if you’re not convinced of a check’s authenticity there’s a good chance your bank will feel the same way.

Use Inks That Can’t Be Washed Off

Washing off ink with solvents is one common tactic used by fraudsters. You can stay one step ahead of them by signing your checks with ink resistant to these substances.

Use Tamper-Proof Checks With Special Security Measures

Many modern checks are much more secure than the paper checks of the past. If you’re concerned about security, use tamper-proof checks to make your business payments. These paper checks have a tamper-resistant security coating. If someone tries to alter the addresses or check amount, a visible stain will appear, rendering the check unusable.

As with all payment methods, accepting paper checks carries a degree of fraud risk. However, if you consider the following strategies, your business’s chances of becoming a fraud victim are greatly reduced.

David Jackson

David is a personal finance expert, a professional male model, and an entertainment writer.