How to Prevent Check Fraud

With credit card and digital payments on the rise, it may seem as though checks are a relic from the past. However, banks still process roughly 14.5 billion checks annually, according to a 2019 Federal Reserve Payments study.1 And according to a 2020 survey by the Association for Financial Professional, checks are still a top target for both attempted and actual fraud, with 74% of organizations reporting check fraud — and increase of four percentage points compared to the previous year.2

Checking fraud typically takes two forms:

• Altered checks. Thieves steal a legitimate, signed check and alter the payee and/or amount. The check is then cashed, and funds are gone from your account before you realize the check didn't make it to its intended recipient.

• Counterfeit checks. Criminals steal basic account information and use it to create doctored business checks. Within a matter of hours, they can produce hundreds of realistic-looking checks and clean out your checking account.

If your business falls victim to check fraud, you've not only lost money, but you'll lose time and productivity to closing accounts, issuing stop payments on outstanding checks, and reissuing payments. Here are six ways to avoid losing money to altered, forged, and counterfeit checks.

1. Order checks from a reputable source

Banks and other reputable check-printing businesses typically include security features on checks that help combat counterfeiting and alteration, such as:

• Watermarks that are hard for fraudsters to duplicate.
• Reactive paper and ink that alert the bank the check has been tampered with.

Some checks printed by online retailers don't include these security features and may be rejected by your bank, even if the account holder legitimately bought them.

2. Fill out check properly

• Use the entire name of the company when writing or printing checks. For example, if the payee is the Internal Revenue Service, don't abbreviate “IRS.
• "Indicate the amount of the check with both numbers and words, and spell out the amount completely. For example, on a check for $2,255.00, write out "Two thousand two hundred fifty-five dollars and 00/100." This makes it harder for fraudsters to tamper with the amount.
• Take care to fill in all available space on every box and line. If your entry doesn't take up the full box or line, draw a line to the end of the space to prevent criminals from making alterations, such as adding an extra zero or adding an alternative payee. Filling out the check properly helps to ensure it is endorsed and cashed correctly.