How to Prevent Check Fraud

Learning how to prevent check fraud has become a major challenge for consumers and businesses alike. Check fraud has become a big business for criminals. A recent survey conducted revealed that 72 percent of companies experienced some sort of attempted or actual check fraud. The average check fraud scheme lasts eighteen months before it is discovered. Unfortunately check fraud is expected to grow by 2.5 percent each year. How does the average person prevent check fraud? The answer lies in the statement, "knowledge is power." When the average consumer is armed with the knowledge of check fraud and what signs to look for,  preventing check fraud can be done. Check fraud can take on several forms including insufficient funds, check kiting/check floating, paperhanging and check alteration.

  1. General insufficient funds check fraud can often not be intended fraud at all. This is often the result of an unexpected issue with the bank. It is quite difficult to decipher an individual's intentions prior to accepting a check; therefore, the best way to prevent check fraud in this instance would be to find an alternate way of verifying the check. The best way to prevent this sort of check fraud and would be to use companies such as PayPal to process payments and protect yourself from the fees associated with returned check fees. On the other hand, a small business could prevent check fraud by simply enrolling in one of the many check verification companies. Some unscrupulous people would transfer balances from  bank to bank and write checks to unsuspecting victims. Often the checks would bounce leaving the victim holding the bag. This type of check fraud is called check kiting or check floating. Fortunately many banks have taken steps to prevent this sort of check fraud.
  2. For those people who have received unsolicited email promising riches in another country, such scams have become common place. Yet as individuals become more able to prevent check fraud, scam artists create new scams. Fake job offers are being used that involve cashing checks at a bank and forwarding money. This is paperhanging. If the average consumer is aware of paperhanging, they can be aware of such schemes, which in turn can prevent them from becoming a victim of check fraud. The sad thing about many paperhanging schemes is that the victim can often be prosecuted for these misdeeds.  The thief will steal checks from someone else's account or create a fictional account and then cash the checks, get the money and disappear. It is imperative to the prevention of check fraud and identity theft that extreme caution is practiced when using checks and that a "job" is never taken involving forwarding money to a third party.
  3. The final scheme that an individual who wants to prevent check fraud needs to be aware of is check alteration. If you receive a check, be aware of any suspicious looking copying or marking. Using this method it is a good idea to use checks that do not allow alterations or use a pen that bonds better to the paper to prevent alterations.

Preventing check fraud takes savvy and attention to detail. Keeping an open eye is an excellent way to prevent being a victim.


References:

Tips to Prevent Check Fraud

show comments

What Others Are Reading Right Now.