6 Ways To Avoid Check Fraud

Since the invention of the check, people have been constantly inventing new ways to pass fraudulent checks. The National Check Fraud Center estimates that 1.4 million fraudulent checks are written each day, costing businesses over ten billion in losses annually. Fraudulent check writers have found a friend in new technology such as color copiers, high resolution scanners and magnetic or MICR toner. MICR stands for Magnetic Ink Character Recognition, and it refers to the magnetically encoded line at the bottom of each check. Traditionally, this line could only be printed with a highly specialized magnetic ink on an offset press.

As a business owner, you and your company are susceptible to check fraud; however, there are ways to guard against it. Here are 6 steps that you and your business can follow to successfully defend against check fraud.

1. Print Your Own Checks ?Real Time – The main benefit to printing yourself is security. Traditionally a business orders check stock from a company like Harland or Deluxe and they put the checks in a supply room or closet. These unused checks are a goldmine for any disreputable person that runs across them – all they have to do is grab a check from the bottom of the pile, remove it. In all likelihood, you’ll never know that last check is missing until at least a month later, and that’s if you are lucky and you regularly reconcile your check book and examine each transaction.

2. Buy Secure Check Stock ?When selecting a blank check stock, make sure the check stock is loaded with security features ?this will make it difficult for a scammer to copy or scan the check. Recently the US treasury department spent millions adding security features the newly redesigned notes. Many of these same security features are now available for check stock. Here are some security features to look for in check paper:

3. Positive Pay File Transmittal ?A great way to stop check fraud is to generate a positive pay file and transmit it to your bank. Every time you print a batch of checks, you transmit a positive pay file listing the checks and their amounts to your bank. If a check amount is altered or a check is duplicated the bank will reject it because it does not match the positive pay file. Positive pay is fairly common in large companies, but a small company may not have the resources or the software to produce the file and transmit it. Contact your bank about this service.

4. Check Storage / Access ?One key to avoiding check fraud is eliminating, or at least, decreasing access to documents with your bank account number on them.

5. Electronic Payment ?The only way to entirely eliminate check fraud is to eliminate checks. Check processing is very costly for banks and they would love nothing more to eliminate checks all together. With the advent of EDI (Electronic Data Interchange) many large companies such as Home Depot only deal with vendors that can send invoices and receive payments through EDI.

6. Pay Attention ?You may follow all of the above steps and still somehow get scammed. Paying attention to your bank and credit card statements will help you detect any discrepancies earlier. The earlier the problem is detected, the more likely that you will be able to catch the culprit and regain your hard earned cash.

The author used to be a bathroom design studio owner and quit one year before, he has make investment on fishing charters auckland and contact lenses and finally he decided to start a online shop for contact leases.