04 Aug 2017

Avoid Check Fraud Perils on Your Journey

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As your practice chugs along, it is important to be aware of the  risks facing businesses today – including the risk of check fraud.

Due to advancements in technology, criminals are finding more avenues to commit check fraud than ever before.

Learn more about this increasingly common practice and steps you can take to safeguard against it below.

Common Types of Check Fraud

The most common types of check fraud include counterfeiting and checkwashing:

  • Counterfeiting can include fabricating a new check or duplicating an existing check.
  • Checkwashing involves an attempt to erase and edit information on a check.

Other types of check fraud include forgery (issuing a check without proper authorization), forged signature (forging a signature on the front of a check), forged endorsement (forging a signature on the back of a check), paperhanging (purposely writing checks on closed accounts), and check kiting (opening accounts at two or more institutions and creating fraudulent balances.)

Tips to Avoid Check Fraud

Take measures to guard against check fraud by regularly taking the following actions:

  1. Ensure all checks are issued through your case administration software. As a BMS client, the check data in your case administration software is one of the information streams used to determine if a check is fraudulent or not. Also, if a check is issued through a third party, request that the payroll company provide the check data in either an Excel (.xlsx) or a comma-delimited format (CSV) so that it can be uploaded into your case ledger. This data should be sent to the BMS Banking Center at least 48 hours before checks are distributed in order to allow BMS to put check fraud measures in place for these larger-scale check distributions. Learn more about proper procedures for checks issued through third parties  here.
  2. Keep blank check stock and printed checks locked away. Blank check stock and printed checks should always be securely stored in a locked location lest they fall into the wrong hands. In addition, never leave your checkbook in your vehicle or out in the open.
  3. Do not send outgoing checks from your mailbox. Instead, physically deliver the check to the post office, hand it to a mail carrier, or drop it in a USPS mailbox. This will further protect the check from being illegally obtained by an outside party.
  4. Review images of checks that have been cashed on a daily basis. Every day, you should check your BMS software to see exactly what checks have been processed by the bank. This allows you to catch any fraudulent checks in a timely manner, void the check, and safeguard your account from further fraud.

What to Do If You Fall Victim of Check Fraud

If you discover a fraudulent check—a check that is fake or has the wrong recipient, amount payable or other information entered—inform the BMS Banking Center immediately so that we can start advocating on your behalf with the Bank. While there are no guarantees that funds can be recovered, the more time that has passed after a check has been tampered with, the less chance that any funds can be recovered as the fraudster may have closed their account.

If you have any questions, please contact the BMS Banking Center at banking@bmsadvantage.com.