In today’s digital age, there are reports of fewer and fewer checks being ordered every year. However, there are still many businesses and individuals who like using checks because it shows a paper trail. There is one significant threat that can happen when using checks and that is check fraud. Check fraud causes many businesses across the United States to lose thousands of dollars, making it crucial for business owners to find alternate payment methods or establish enhanced safeguards.

Preventing check fraud can be easy when you equip your business with the tools to easily detect and stop fraud before it even happens. Let us break down what check fraud is and what your business can do to reduce it.

What is check fraud?
Check fraud by definition is the illegal use of checks to deceive and defraud individuals or organizations. As a small business owner, understanding the types and methods of check fraud is essential to protecting your business. Here are the most common ways check fraud can occur:

• Forged checks –
  • Forged Payee Checks – Generally involve stolen issued checks where the perpetrator forges the payee’s endorsement.
  • Forged Maker Checks – Generally involve stolen blank checks where a perpetrator forges the maker’s signature (signed by someone without the account holder’s permission) and makes the check payable to self, accomplice, etc.
• Altered checks – checks that have been changed by someone other than the check writer, such as changing the amount or payee.
• Counterfeit Checks- False checks drawn on valid accounts that resemble a real check containing a forged signature.

Check fraud can severely impact a business, no matter how it occurs. However, when it occurs in small businesses it can be particularly devastating. There has been an increase in check fraud due to lost or stolen checks being forged or altered, making them one of the least secure forms of payment. There are ways to protect your business from losses due to this type of fraud.

Preventing Check Fraud
There are several ways to reduce loss due to check fraud, especially for businesses. Many financial institutions offer Positive Pay, which prevents fraudulent checks from clearing your account by matching it against records of issued checks. This virtually stops fraud from happening before it occurs. Business owners can utilize different payment solutions and opt to use them when paying vendors. When checks must be used, always ensure that you are using safe check practices such as writing in permanent ink, filling in all spaces and limit as much personal information as possible.

At First Savings Bank, we offer comprehensive fraud mitigation services that will shield your business from significant losses not only this year but for years after. Our Treasury Management team will listen and understand your concerns and build services to enhance your business. Reach out today to discover how you can safeguard your business from fraud.