Valley Commercial Bank Provides Guide for Businesses to Prevent Check Fraud
- A new guide to prevent check fraud is available for businesses
- Fraudsters prefer business checks
- Anti-check fraud measures are available and effective
Commercial checks, as we know, are worth more on black market -- often twice that of personal checks -- because they are easier to obtain and are sent via USPS (79% of them, according to AFP research). That, of course, makes businesses prime targets for fraudsters seeking "raw material" for creating and "passing" fake checks.
Checks as a payment method continue to be highly vulnerable to fraud. According to the Association of Financial Professionals (AFP) Payments Fraud and Control Survey Report, check fraud remains the most prevalent form of payments fraud, with 65% of organizations saying they were victims of check fraud in 2023.
Financial institutions deploy different technologies like payee positive pay and image forensic AI to protect their commercial accounts from check fraud. These technologies have led to a 95% detection rate but, as we all know, more can be done -- specifically from the business' side.
Anti-Check Fraud Measures
Because businesses generally have more money available, fraudsters see a much more reliable "return on investment" if they go after large amounts.
A proactive stance is key to protection against the devastating consequences of check fraud. Take action and work with your bank to ensure the continued success and security of your business.
Valley Commercial Bank recommends three anti-fraud measures:
- Reconcile accounts regularly: This should include reviewing monthly statements and other internal accounting controls to prevent errors and detect discrepancies.
- Educate employees on fraud prevention techniques: Train your teams to look for signs of alteration or forgery, such as discrepancies in handwriting, missing information, or unusual paper quality.
- Implement secure check issuance procedures: For example, you should require two authorized employees to approve and sign checks to prevent unauthorized payments.
What to DO When Experiencing Check Fraud: A Guide
If a business does experience check fraud, Valley Commercial Bank recommends the following procedure:
- Notify your bank immediately
- File a police report
- Keep records of fraudulent checks
- Monitor your accounts closely
- Inform your insurance company
In the end, all financial institutions and their consumer and commercial accounts are at risk of check fraud. However, by working with clients and keeping them informed, FIs and their businesses can be well protected from losses. A process in place when a fraudulent check inevitably does pass through means the customer has the knowledge to possibly recoup losses and help authorities locate the fraudster.