Are you still writing checks? Many people are, despite more secure methods such as electronic payments and mobile bill pay. Check fraud is a significant threat, so it’s important to understand how checks are used to commit fraud and how you can protect yourself from falling victim to these schemes.
The Rise of Check Fraud
Check fraud is a type of white-collar crime that involves using fraudulent or stolen checks to gain unauthorized access to funds. While the prevalence of check fraud has declined in recent years, it still poses a considerable risk to individuals and businesses alike. Here’s how checks are used to commit fraud:
1. Counterfeit Checks
Counterfeit checks are fake checks created to appear genuine, often using sophisticated printing techniques. Perpetrators can use stolen bank account information to create counterfeit checks, which they then use to make unauthorized payments or withdrawals.
Forgery involves altering a genuine check’s signature, payee, or amount to divert funds to the fraudster’s account. This can happen when someone gains access to your checks or personal information, making it relatively easy to manipulate them.
3. Check Kiting
Check kiting is a more complex form of check fraud. It involves taking advantage of the time it takes for checks to clear between two or more bank accounts. Perpetrators deposit insufficient funds in one account and then withdraw funds from another account before the initial check bounces.
4. Stolen Checks
When checks are stolen, criminals can use them to make unauthorized purchases or withdrawals. Stolen checks can be especially damaging if they fall into the wrong hands, as they provide ready access to your bank account.
Protect Yourself from Check Fraud
Now that we understand the methods criminals use, let’s explore some proactive steps you can take to protect yourself from check fraud:
1. Embrace Electronic Payments
One of the most effective ways to prevent check fraud is to reduce your reliance on paper checks. Embrace electronic payment methods like online banking, mobile apps, and electronic funds transfers. These methods are not only more secure but also offer greater convenience.
2. Secure Your Checks
If you still use paper checks, keep them in a secure location, such as a locked drawer or safe. Avoid carrying blank checks in your wallet, as losing them could lead to check fraud. Additionally, send large checks directly from the post office to lessen the risk of checks being stolen in the mail.
3. Monitor Your Accounts
Regularly review your bank and credit card statements for any unauthorized transactions. Many banks offer account alert services that notify you of any unusual activity, such as large withdrawals or suspicious transactions.
4. Use Security Features
When ordering checks, choose options with enhanced security features, such as watermarks, holograms, and microprinting. When writing checks, use indelible ink pens to make it more difficult to “wash” or alter the check, cross out any blank spaces, and avoid large spaces between words. This makes it more challenging for counterfeiters to alter or replicate your checks.
5. Be Cautious with Personal Information
Be selective about who you share your personal and financial information with. Shred old financial documents, statements, and canceled checks before disposing of them to prevent identity theft.
6. Educate Yourself
Stay informed about the latest check fraud schemes and scams. Awareness is a powerful tool in preventing fraud, as it helps you recognize and avoid potential threats.
7. Report Suspected Fraud
If you suspect check fraud or have fallen victim to it, report it to your bank and local law enforcement immediately. Timely action can help prevent further losses and hold the perpetrators accountable.
Learn more with Valley
While check fraud is still a concern in today’s digital age, you can protect yourself by using these seven helpful tips.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, accounting or professional advice. You should consult our personal tax, legal, accounting and professional advisors for advice before engaging in any transaction.