Check Fraud
Check Fraud Increasing
It seems odd that an old-fashioned scam like check fraud is on rise during the current digital era, but check fraud is a rapidly growing issue. With 61% of Americans still writing checks, check fraud has grown 385% since 2020 and is only projected to increase in the coming years.
To protect yourself and your practice, here are the most popular check fraud methods and what you can do to avoid them:
1) Check Washing. Fraudsters steal checks from a mailbox, chemically wash the check so they can change the amount and recipient, then cash the check at another bank. Since it falls on the depositing bank (not your bank) to investigate and make restitution, resolving the issue can take weeks or sometimes months. Prevention:
Use your bank’s Positive Pay system, which tracks checks written so they can be matched when presented for deposit.
Use indelible black gel ink pens that can not be washed out with the household cleaning products used by fraudsters
Use your bank’s online bill pay system as it pays many of your bills electronically and those paid with paper check include anti-washing technology.
Use an ACH bill pay system like the Relay system we use for clients or the Zelle platform for personal expenses
2) Forged Checks. Blank checks stolen from your possession during a break-in or by an employee will be filed out and deposited by the thief after forging your signature. Prevention:
Keep your checks in a locked and secure place of your practice or home office.
Never give employees the ability to sign checks on behalf of your your practice.
If an employee prepares checks for you to sign, carefully review the checks with the matching invoices before signing.
Use an ACH bill pay system like the Relay system we use for clients to keep physical checks from being stolen.
3) Counterfeit Checks. Blank check stock is available everywhere and the fraudster only needs your valid bank information to print off a pile of checks against your account. Prevention:
Store checks in a locked and secure place, preferably not in the practice.
Opt for online bank statements, especially if the statements include check copies. Shred any old checks and statements.
Use an ACH bill pay system like the Relay system we use for clients to keep your bank information private.
By using the prevention methods listed above, you can make it less likely that you become a victim of check fraud.
If your best efforts do fail to prevent a fraud, you should contact your bank immediately, file a police report, notify the credit bureaus and consider filing a report with the FTC.
If your practice unknowingly deposits a counterfeit check (rare but can happen), you will be responsible for returning the amount to the bank and will need to seek out the patient for payment.