Avoid Check Fraud

Did you know that it is estimated that retailers throughout the nation lose $12–$15 billion each year due to the acceptance of bad checks? You should examine all checks presented for payment to make sure they’re legitimate. Although any one of these signs does not necessarily indicate that the check is bad, any combination of them should signal a warning.

Lack of perforation: Most checks are connected in a book and are removed at perforations. Lack of perforation may indicate a counterfeited check.

Check number is low or missing: According to the Los Angeles County District Attorney’s Office, “About 90% of bad checks are drawn on new accounts.” It stands to reason that caution should be exercised when accepting checks with low numbers (up to 400 on personal or up to 1500 on business accounts).

Changes in font: If the font is uneven, appears in varying styles or sizes, the check may have been altered.

Missing information: If the payee’s name, address, or phone number or the bank’s name or address is missing, the check may have been counterfeited or altered.

Stains or discolorations: Checks altered chemically, or through the use of something as simple as an eraser, can leave changes in the color or tone of the check stock. What looks like a coffee spill may really be a sign of fraud.

MICR encoding: Magnetic Ink Character Recognition (MICR) coding are the numbers printed along the bottom of checks. The special magnetic ink with which the numbers are printed is not glossy, so if they do appear glossy, they may be forged. If the check does not have MICR numbers printed on it, or if they do not include the check number, the check may be fraudulent.

Signature: If the check is not properly endorsed, this may be a simple error or it may be an attempt at fraud. Putting security measures in place, knowing the signs of check fraud and responding to suspicions in a timely manner can help your business reduce the risk of being a victim of check fraud.


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