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Check Fraud Is Hot at Holiday Time

Dec 04, 2019

This Holiday, Protect Your Business

from Check Fraud

The holidays are a hot time for check fraud.

Though certainly not limited to this time of year, consumers who perpetrate check fraud seem to take a particular liking to the holiday season.

And while it’s true that fewer people use paper checks these days, check fraud is actually on the rise. In fact, according to the American Bankers Association, banks lost $770 million to check fraud in 2016. No business is immune from it, which is why every company should take necessary precautions.

Spotting a Bad Check

So how do you spot a bad check?

Here are some common warning signs to look for when examining a paper check. Bear in mind that one sign on its own does not necessarily indicate fraud. But the greater the number of signs, the greater the possibility that the check is bad.

Missing routing or bank numbers, or a routing code that doesn’t match the address of the bank

Missing or handwritten address.
Ink looks shiny or feels raised.
Bank name is missing.
Personal check has no perforated edge.
Bank name or address has spelling errors.
Signature is missing or irregular-looking.

Information on check appears to have been altered or erased.

Check is drawn on a new account with no (or a low) sequence number.

Check colors smear when rubbed with a moist. finger, suggesting it was printed with a color copier.
Check from an unknown customer/patient is written for an unusually large amount.
Bank name or address is typed instead of printed.
Check is printed on poor-quality paper that feels slippery.
Check is postdated.
"Void" is written or printed anywhere on the check.
Check is glued, taped or stapled.

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Security features, like a watermark or a padlock icon, are a good sign that a check is legit. You may also want to make a quick call to the payer's bank before you accept the check.

An Ounce of Prevention

When accepting a paper check from a consumer or patient:

Check ID – make sure the person writing the check is the person who owns the account. It’s a good idea to request two forms of identification, and then list them on the back of the check.
Compare the signature on the ID to the signature on the check.

Make sure the address on the check is current; write the phone number and DOB on the check, if this information is not already printed on the front.
Never accept third-party checks, such as payroll or government checks, as these may be stolen.
If only a PO Box is listed on the check, ask for a residential address.

Of course, most bad check situations are innocent mistakes and can be quickly resolved. But some are not.

As a business owner, you have the right to protect yourself from check fraud. If a paper check just doesn’t feel right or look right, don't be afraid to request another form of payment.

If You Need Help

But what if that horse has already left the barn?

If you need help recovering funds paid to you with bad checks, contact the collection professionals at CBSI.

Our services include demand letters, personalized phone calls, skip tracing, credit reporting to national credit bureaus, even legal recourse when appropriate.