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Tips to Avoid Check Fraud and Accepting Bad Checks

Posted by Mike Harris | Thu, May 18, 2023 @ 11:38 AM

Check fraud and accepting bad checksAs a business owner, protecting your company from fraudulent financial activities is critical during these uncertain economic times. Check fraud and accepting bad checks can result in significant financial losses for your organization. However, by applying preventive measures, careful practices, employee training, and partnering with a check approval company, you can minimize the risks associated with check fraud. In this article, we will explore essential tips to help businesses avoid check fraud and protect themselves from accepting bad checks.

Stay Informed about Common Check Fraud Schemes

It’s important to stay updated on the latest check fraud schemes and educate your staff about them. Criminals constantly devise new methods to defraud businesses, so it's essential to remain vigilant. Regularly communicate with your bank and other business owners to share information about emerging check fraud trends and preventive measures.

Check Fraud Training, Policies and Procedures

Check Fraud Training, Policies and ProceduresA check fraud prevention program begins by establishing strict protocols for handling checks within your organization. Ensure that your employees are well informed about the risks of check fraud and the procedures to follow when accepting checks.

Develop and communicate clear policies regarding check acceptance within your organization. Specify the types of checks you accept, the verification process (if using a third party such as CrossCheck), and any limitations or restrictions. This will help ensure consistency in handling checks and provide a framework for your employees to follow.

Always ask for identification when accepting a check. Verify that the name and address on the identification match the information on the check. Confirming the identity of the check presenter adds an extra layer of security and reduces the risk of accepting bad checks. You should also train your employees to look for signs of altered or forged identification documents.

Finally, train your employees on the correct way to endorse checks, including using restrictive endorsements that limit the negotiability of the check to your business's account. Implement controls to ensure that checks are securely stored until they are deposited.

Utilize Check Security Features

Teach staff members how to identify suspicious behavior and or signs of a fraudulent check. Provide them with guidelines for verifying the authenticity of checks and verifying the payee's identification.

Modern checks often come with various security features designed to deter fraud. These features may include watermarks, heat-sensitive ink, micro-printing, and security threads. Familiarize yourself and your employees with these security features, and ensure that they are always present and properly examined when accepting checks.

CrossCheck, Inc. provides tips on how to spot check fraud as well.

Avoid Check Fraud and Avoid Accepting Bad Checks with Check Verification Services

Prioritize the security of your business's financial transactions and always exercise caution when accepting checks. With the right measures in place, you can safeguard your business's finances and ensure its long-term success.

You can significantly reduce the risk of falling victim to check fraud by implementing these tips, staying proactive, and utilizing check verification or guarantee services offered by third-party providers such as CrossCheck, Inc. These services quickly verify the authenticity of a check by cross-referencing it against databases of known fraudulent checking accounts.

Accepting payments in exchange for goods and services shouldn't cause merchants to stress over the integrity of the customers’ payment as well as the fines accrued from returned checks. CrossCheck, Inc. offers solutions that help merchants reduce the risk of accepting checks as a viable payment option while saving time and money.

Contact us for a Free Consultation to discover how your business can increase sales by accepting a greater number of checks, and reduce the risk of accepting checks in the process.


Topics: Check Fraud, Check Guarantee, Check Verification

Written by Mike Harris

Senior Vice President Mike Harris manages the daily operations and budgets of three CrossCheck groups: Merchant Analysis and Control (MAC), Claims, Underwriting and Risk Management. He held management positions in the Sales and Consumer Relations departments before assuming his current role in December 2001. He earned a bachelor of arts in accounting and economics.