CHECK FRAUD
YOU COULD BE ON THE HOOK!
Did you know that under UCC (Uniform Commercial Code) standards, bank clients as well as banks themselves share some of the blame for fraudulent losses?
In addition to this vulnerability, the investigation of the crime may result in large costs and lost time, not to mention harm to your credibility and reputation.
To prove that you have done your due diligence is your sole line of defence.
Applying careful procedures for your checks is one way to illustrate this.Utilizing checks with well-implemented security features is an additional option.
HOW BAD IS THE PROBLEM?
Since the issue is so significant, the banks prefer not to discuss its full scope.The range of annual estimates is from a few hundred million to ten billion dollars. The FBI monitored almost 26,000 cases in 1991, however this only represents the tip of the iceberg since the agency primarily concentrates on crimes involving sums more than $100,000. A family is accused of stealing more than $1 million from local businesses since 1993 by placing checks on closed and inactive accounts at 11 financial institutions in Indiana and Chicago under 25 different names, according to The Green Sheet, a journal for the financial services industry.
Northern Trust Bank has found more than $3 million worth of fake checks in just 4 years.
WHAT KIND OF THINGS DO CRIMINALS LOOK FOR?
It is an endless list, but here are some of the types of things
that someone looking to counterfeit or tamper might look for:
* High volume bank accounts where a fraudulent check can easily slip through.
* Checks that are easy to reproduce using a color copier.
* Checks that are easy to tamper with.
* Easy access to checkbook or check stock.
WHAT CAN I DO TO PROTECT MYSELF?
By protection, I mean lessening the likelihood that your checks will be forgeried or altered, as well as lessening your responsibility if this does happen.
Recognize that fraud cannot be stopped. But if you take a two-pronged approach, you can dramatically reduce the risk. It is crucial that you implement good check processing procedures and use checks that are challenging to forge or tamper with.
* Reconcile your bank statement promptly. Now that bank statements are available online, you can do this as frequently as you feel is necessary for your situation.
* Restrict access to your checkbook/check stock. Ensure that only trusted staff that need access have it.
* Audit your checks. However, this can be difficult because often checks are removed from the bottom or middle of the book or stack.
* Use a custom design. While this isn't an affordable option for many businesses, look into it. The next best thing is to ensure that your check supplier uses comprehensive security features. Remember though that a custom design is not a substitue for security features.
* Advise your bank branches' officials of the security features in your checks .. in person or in writing (and keep a copy of the letter on file!).
* If you issue a large number of checks, particularly with a low amount (eg. rebate checks), open a separate account and alert thebank staff of an upper limit for that account.
THE BOTTOM LINE
Avoid taking unneeded risks.The less likely it is that someone will tamper with your checks, the more security you have through procedures and choice of check form.
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