Avoid Check Fraud

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Did you know that it isestimated that retailers throughout the nation lose $12–$15 billion each yeardue to the acceptance of bad checks? You should examine all checks presentedfor payment to make sure they’re legitimate. Although any one of these signsdoes not necessarily indicate that the check is bad, any combination of themshould signal a warning.
 • Lack of perforation:Most checks are connected in a book and are removed at perforations. Lack ofperforation may indicate a counterfeited check.

• Check number is low ormissing: According to the Los Angeles County District Attorney’s Office, “About90% of bad checks are drawn on new accounts.” It stands to reason that cautionshould be exercised when accepting checks with low numbers (up to 400 onpersonal or up to 1500 on business accounts).

• Changes in font: If thefont is uneven, appears in varying styles or sizes, the check may have beenaltered.

• Missing information: Ifthe payee’s name, address, or phone number or the bank’s name or address ismissing, the check may have been counterfeited or altered.

• Stains ordiscolorations: Checks altered chemically, or through the use of something assimple as an eraser, can leave changes in the color or tone of the check stock.What looks like a coffee spill may really be a sign of fraud.

• MICR encoding: MagneticInk Character Recognition (MICR) coding are the numbers printed along thebottom of checks. The special magnetic ink with which the numbers are printedis not glossy, so if they do appear glossy, they may be forged. If the checkdoes not have MICR numbers printed on it, or if they do not include the checknumber, the check may be fraudulent.

• Signature: If the check is not properly endorsed, this may be asimple error or it may be an attempt at fraud. Putting security measures inplace, knowing the signs of check fraud and responding to suspicions in atimely manner can help your business reduce the risk of being a victim of checkfraud.