CrossCheck Blog

Check Processing & Payments Information

Check Services vs. Check Fraud

Posted by Kevin Walli | Mon, Apr 30, 2012 @ 10:00 AM

check fraudStartling Check Fraud Stat of the Day - What is Check Fraud? Ernst and Young reports that more than 500 million checks are forged annually in the U.S., with losses totaling more than $10 billion.

Check fraud is the unlawful use of checks to illegally obtain or borrow funds that do not exist in an account, or are being obtained from an account where the perpetrator is not the legal account owner.

What are Some Examples of Check Fraud?

Examples include, but are certainly not limited to:

  • Kiting - Is taking advantage of the time between the acceptance of a check and payment from the bank. The check is accepted on good faith that the check will be covered by the bank. The check writer is long gone with the service or product by the time the bank sends a notice of non-sufficient funds.
  • Abandonment - Is cashing a check or using it to purchase a product or service with the knowledge that the check will bounce. In these cases, the check writer abandons the checking account with no intention of ever covering the check.
  • Forgery - Is simply signing someone else's name to a check without their knowledge or permission. Forgery is most often employed with stolen or altered checks. 
  • Theft - Is the act of stealing checks and cashing them.
  • Washing - Is altering a check by washing it clean so that it can be forged.

How Can Check Fraud be Prevented?

By taking these common sense steps:

  • Look it over, both sides, for alterations and inconsistencies
  • Notice discoloration, blurring or unevenness in printing
  • Use Gel pens when writing checks, their ink is trapped in the paper dye
  • Never place personal information on your check, such as your Social Security or phone numbers
  • Only sign checks at the point of sale
  • Never write checks to "cash"
  • Always mail checks in a secure mailbox
  • Make sure ordered checks come in sealed boxes, thieves like to take checks later in a series so that by the time you notice it they're vacationing on your dime
  • Don't accept third party checks
  • Check identification of the check writer and make sure it matches information on the check
  • Only allow trusted employees to write checks for your business
  • Keep an accurate balance in your checkbook to monitor discrepancies

How Can Your Business Reduce Check Losses?

Although fraud cannot be completely avoided, as a business owner there are steps to take to reduce check losses.  A professional check service can save time and even increase sales by offering payment flexibility along with check verification and guarantee. An electronic check processing service can reduce claims submissions.  You save time by eliminating trips to the bank, as checks can be scanned at your PC and submitted to the bank electronically. You can even have multiple check submissions where the client submits several checks deposited over an agreed upon time period.

I'm a Victim of Check Fraud. What Should I Do?

Read our blog article Check Fraud Victim's 6 Step Guide for Recovery.

With so much at stake, can you afford not to use a professional check service? How do you get started? By filling out this proposal request.

choosing check service

Topics: Check Fraud

Written by Kevin Walli

Kevin Walli is an award-winning graphic designer with 18-plus years of experience in graphic design, web design and photography. Flexible and creative with an excellent sense of humor, Kevin enjoys spending time with his family, photography, reading, music and sports.