Check fraud and forged checks mean losses for several parties: the business receiving the check, the person, or business, whose account was compromised and the financial institutions sorting it all out. Recently, several arrests for check fraud have made the news. One arrest involved a woman in California who created checks using blank stock in her home and then purchased gift cards with them. Another arrest involved a woman who stole checks from mailboxes and "washed" them, removing the original details. She then altered the checks to make them out to herself. In Chicago last December a team of check fraudsters were arrested after they stole company checks, set up phony businesses with similar names to the stolen checks and deposited the checks to the tune of over $1.6 million.
The penalties are stiff in cases like these. Bank fraud penalties can mean maximum prison time of up 30 years and fines of up to $1 million. However, businesses, as well as individuals, are financially impacted when these crimes occur and getting restitution can be a challenge.
Since the majority of B2B payments continue to be made by check, we thought it was a good time to share some basic tips on check fraud and forgeries from our 10 Tips to Spot Fake Checks tip sheet.
Feel the edges. If all of the edges of the check are smooth, the check may have been printed on a computer printer. Most legitimate checks will have at least one perforated side. Also feel the paper; check stock is heavier than copier paper and is designed to stand up to processing equipment.
MICR lines count. At the bottom of every check should be a line of digits that represent the bank routing number, account number and check number that make up the MICR line. MICR stands for magnetic ink character recognition which can be read by check processing equipment and bank sorting machines. Magnetic ink looks and feels dull - not shiny.
Question the origin. If this check was unexpected or is from someone you are not familiar with, proceed with caution. Be careful accepting second or third party checks that could be stolen. Make sure the check is not marked VOID or non-negotiable.
Look for security features. Security features in paper checks can include a small background pattern, the placement of a padlock icon and message on the front of the check and security note on the back.
If you're concerned about check scams and would like more tips on what to look for, please download our tip sheet. Do you have suggestions or an experience to share? Let us know below.
Tags: Check Fraud