Check fraud is one of the largest challenges facing businesses today. A significant amount of check fraud is due to counterfeiting through desktop publishing and copying - to create or duplicate an actual financial document- as well as chemical alteration, which consists of removing some or all of the information and manipulating it to the benefit of the criminal. To protect your business, the Better Business Bureau offers the following tips:
- Set guidelines regarding the types of checks your business will accept - personal, two-party, payroll, government, or traveler’s checks. Make sure signs are posted in your establishment so customers know your check cashing policy.
- Examine the check very carefully. The extra effort involved in carefully scrutinizing every check can pay off. When a personal check is presented, always insist on proper identification. But keep in mind, if a check is stolen or forged, then the identification presented may be too.
- Compare signatures. Regardless of the type of identification you require, it is important that you compare the signature on the check with that on the identification. Be wary of individuals who take extreme care and much time in signing their names and who try to distract you while they are signing the check or while you are examining it.
- Set a policy for check cashing and review it with employees frequently. Your policy may include requiring management’s approval, verifying checks through the issuing bank (some banks will perform this service for depositors only), or verifying checks through a check verification service. Before contracting with a check verification service, ask the service to provide proof from the Federal Trade Commission that it complies with the Fair Credit Reporting Act.
- Also, consider allowing your customers to use a bank electronic debit card. This transaction allows the exact amount of money to be debited from the customer’s bank account at the time of purchase. If the money isn’t in the account, the transaction will not be approved.
If you are a victim of check fraud, send a certified letter to the individual, if you have the name and address. If the party does not respond to you, usually within 10 to 15 days, depending on your state law, you can file a criminal charge against them. Report the fraud to the police, and your bank immediately. Every state has a different criminal code of laws. Determine what you need to do to comply with your state law so that you will be able to press fraud charges and recover damages.
