Enterprise Bank & Trust
Check Fraud Prevention

Business Owner's Guide to Check Fraud Prevention

August 25, 2016

It’s not a matter of if, but when fraud will happen. Although there are many forms of payment fraud, checks continue to be the payment method most often targeted. After all, checks are still a commonly used payment method.

The Association of Financial Professionals (AFP) reports 73 percent of American companies have experienced actual or attempted check fraud.1 The AFP adds, “In addition, fraudsters are familiar with checks and so are able to commit check fraud with relative ease with the help of sophisticated equipment.”

Small businesses need to be aware of the types of check fraud. Start by taking action to make it less easy for criminals to commit; that includes working with your bank.

Potential check fraud includes:

  • Counterfeit
  • Altered
  • Forged maker
  • Forged endorsement
  • Duplicates

     

    Partner With Your Bank in Check Fraud Prevention

    Payment fraud has always been a part of running a business. But companies are not alone. Your bank wants to help you prevent fraud as much as possible. So what can you do?

    8 Ways to Help Prevent Check Fraud

    1. Use more secure ACH wire, wire and card payment methods to replace check payment.
    2. Implement positive pay services on all accounts to utilize the highest level of account fraud protection services. This will allow you to verify, approve and pay/return all presented checks manually.
    3. Keep check issue files and online check registers up-to-date to ensure accuracy.
    4. Set up debit filter or debit block to protect accounts from fraudulent electronic debits.
    5. Implement dual control with check issuance. Have one employee assigned to create checks and another employee to reconcile the checks.
    6. Secure check stock, blank checks and facsimile signatures. Require dual control when accessing these items.
    7. Shred unused or out-of-date check stock, blank checks and facsimile signatures prior to disposing these items.
    8. Track and investigate claims in which a customer, vendor or client claims to have paid a bill, but your records do not indicate payment was made. A dishonest employee could have intercepted the check.

     

    Top 5 Tips to Prevent Fraud from Inside the Business

    It’s not easy to think about, but sometimes fraud can happen within the business. To help manage it, remember these tips.

    1. Run background checks on all employees, including credit checks.
    2. Check at least three references when hiring staff.
    3. Split duties between employees.
    4. Notify the bank when an authorized signer or online banking user leaves, and remove all access from all systems for that employee.
    5. Monitor and reconcile accounts daily.

     

    How to Easily Monitor Checks Processed Against Your Account

    Timing is critical in identifying check activity on your accounts. At Enterprise Bank & Trust, we offer our clients the ease of Positive Pay to help quickly identify fraudulent check activity.

    Use Positive Pay to monitor for:

  • Altered check amounts
  • Duplicate check numbers
  • Altered payees
  • Altered account numbers
  • Stale dated checks
  • Voided items

    Positive Pay is just one tool in the fight against check fraud. Combined with fraud prevention best practices – external and internal – it can help companies be prepared when it happens.

    Remember, it’s not a matter of if, but when. Talk to your bank representative today about the options available for check fraud prevention.

     

    1Association for Financial Professionals (AFP): Survey: 73% of American Companies were targets of payment fraud in 2015

     


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