The crime of committing check fraud can affect both users of personal checks and business checks. Victims include consumers, businesses and the banks themselves. According to research by the Identity Theft Resource Center, check fraud continues to increase in the United States.
Unfortunately, technology has made it fairly simple for criminals to create fraudulent checks. Carelessness can also lead to check fraud and identity theft, which could end up costing you money.
Understanding how check fraud works and how you can prevent the different types of fraud will help to protect your household or business from becoming a victim.
There are several ways check fraud can be committed.
Forged Endorsements and Signatures
One of the easiest ways an identity thief can use checks to his advantage is by forging your signature. If your checkbook is stolen or misplaced, someone can write checks and sign your name to make purchases.
The bank does not always authenticate the signature on a check against the signature card kept on file until there is a problem. That means someone could potentially write themselves a check for as much as they want, sign your name and cash it before you even know what happened.
Forged endorsements are another way checks are misused. If someone steals a check written out to you, they can endorse it with a forged signature and cash or deposit the check.
What Can You Do?
Guard your personal checks carefully. Never leave a checkbook in an unsafe location. Be aware of any missing checks in your checkbook by looking for a break in the check number sequence. If you notice a check is missing, call your bank immediately and have that check number cancelled to stop payment.
Don't endorse checks made out to you until you get to the bank. Never make checks payable to "cash."
When you order personal checks online from Check Advantage, you can choose to only enter your first initial and last name in the personal information field. That way if someone does steal your checks they won't know how to correctly forge your signature.
Check Washing
When someone physically alters the information on a personal or business check it is referred to as check washing. This can be accomplished by erasing what you wrote on a check using common household chemicals. Criminals may also add digits to increase the amount a check was written out for, or change the name of the payee to their own.
What Can You Do?
Always completely fill in the areas of all checks you write. Draw a line through any unused space to prevent anyone from making changes to what you wrote.
Instead of normal ballpoint pens, purchase a colorfast or gel pen to write your checks. You can find them at any office supply store. These pens may be slightly more expensive, but they contain a special ink that soaks into the fibers of the check paper. That makes it impossible for thieves to erase.
Avoid leaving checks in your home mailbox for the mail carrier to pick up. The red flag is a dead give away to crooks that there could be checks to steal in the mailbox. The safest thing you can do is drop of your bills in one of the big blue mailboxes or bring them directly to the post office.
Counterfeit Checks
Thieves may also try to print their own checks. The availability of digital printing equipment has created some major opportunities for those who commit check fraud. Anyone with a scanner, copier or printer can attempt to make their own fake checks.
Internet scams have made the use of counterfeit checks even more common in recent years. Often these scams are aimed at senior citizens, stay-at-home mothers and even students in college. You may be asked to wire a portion of a check to certain person or business. Do not fall for this trap!
What Can You Do?
Some warning signs that a check might be counterfeit include; a flimsy feeling to the paper, the bank address listed on the check doesn't match its real address, there are fewer than 9 digits in the routing number or an absence of security features.
Remember - if it sounds too good to be true - it probably is.
Keep your checks from being counterfeited by shredding all cancelled checks before you throw them away. Lock up any personal or business checks in a safe place.
For more information on preventing check fraud consult these resources:
