Proactively protect your business against check fraud

  • April 27, 2023

Fraud is a growing concern for businesses of all sizes, and check fraud is at the top of that list.

Of all the payment methods, fraudsters target paper checks most often1. In fact, the number of check fraud cases has increased significantly over the last three years. The Financial Crimes Enforcement Network reports financial institutions filed more than 680,000 Suspicious Activity Reports of potential check fraud in 2022, nearly double the previous year’s filings2.

Through the use of advanced printing technologies and sophisticated messaging, scammers manipulate checks and create hard-to-detect counterfeit checks. As a result, your business could be at risk for substantial losses.

At The Bank of Missouri, we know a proactive approach is key to protecting your business.

What is check fraud?

Simply put, check fraud occurs when your legitimate checks are stolen or reproduced and then cashed, putting your money straight into the criminal's hands. While check fraud can take many forms, it typically involves scammers who alter stolen checks or create counterfeit checks.

Criminals have increasingly targeted U.S. mail to commit check fraud, typically stealing personal checks, business checks, tax refund checks and others2. Through processes like check washing, the scammer can then rewrite them, replacing the original check holder’s information with their own or fraudulent identity. With check washing, it’s also common to see these illicit actors increase the dollar amount.

In other cases, information like the authorized signature, account number, or routing number on those same stolen checks is used to create fake checks that look like they belong to your company. These counterfeit checks can look so real that it’s tough to detect.

How to prevent check fraud

Protecting your business against fraud requires a team effort between you, your business and your banking partner.

Implement strong internal processes

Having strong internal processes is an important component in combating check fraud. A great first step is educating and regularly training your staff about fraud prevention. As a business owner, it’s impossible to be everywhere, all the time. An educated staff can serve as gatekeepers, questioning and verifying anything that stands out or might not belong before moving forward with a change or transaction.

Beyond educating your employees, establishing and maintaining smart money management practices is another proactive step in safeguarding your business. Reconciling your accounts daily can help you spot errors, fraud or other negative activity. The sooner you can spot an issue, the better. Store blank checks and signature stamps in a secure location, and never leave outgoing checks in a public space or unsupervised mailbox. Lastly, you might consider separating responsibilities so the same person authorized to sign checks is not the same person balancing your books.

Avoid losses with Treasury Solutions

The next best step to avoiding check fraud is to equip your business with the tools to make secure payments and stay alert of any suspect items.

You can simply avoid check fraud by reducing the number of checks issued. Consider moving to electronic payment methods like ACH (automated clearing house). Not only are ACH payments faster and more secure, they also save you from writing, mailing and processing paper checks, giving you more time to focus on your business. ACH payment processing through The Bank of Missouri gives you the ability to control access, and is ideal for direct deposit payroll, vendor and tax payments, as well as recurring payments.

Positive pay is one of the most effective tools to mitigate check fraud. This Bank of Missouri service simplifies account reconciliation and reduces risk by automatically comparing the dollar amounts, check number and payee name against a list of your issued checks. We’ll notify your business with a red-flag when checks are presented for payment that do not match the issue information, giving you the opportunity to authorize the payment or not.

Stay ahead with a partner you can count on

Even with proactive efforts, fraudsters are relentless and will continue to find new ways to target organizations. A trusted banking partner is one of the best resources to protect your business. At The Bank of Missouri, you can count on our bankers to have the knowledge in how to best combat payments fraud, the advanced tools you need to safeguard your organization, and the commitment to walk alongside you through the ups and downs of running a business.

You worked hard for your money. Let us help you keep it safe.