Defending against scams starts with awareness. As fraudsters become increasingly sophisticated and brazen with their schemes, Country Club Bank is working to educate clients about some of the most common scams—and how to spot them. In this issue, we address commercial check fraud.
In an age where credit and debit cards and other electronic forms of payment are the norm, businesses may not think much about their exposure to check fraud.
That would be a mistake.
Good old-fashioned check fraud, just like cyber fraud, is on the rise across the country. Kansas City is no exception. According to the Evidence-Based Cybersecurity Research Group at Georgia State University, which monitors about 60 markets across the country, mail-related check fraud, in particular, has been increasing steadily since August 2021.
What Is Check Fraud?
Put simply, check fraud involves any effort to illegally obtain money using paper or digital checks. Here are a few common examples businesses face:
Forgeries. This type of fraud occurs when someone forges an account holder’s signature on a business’s checks.
Check Theft. When someone manages to steal a business’s blank checks, they can use them for fraudulent purposes; for example, to pay for their own goods and services or to present them for cash payment at a bank.
Mail-Related Check Fraud. This is one of the fastest-growing check scams. A fraudster breaks into a USPS blue box (often via a stolen mailbox key, vandalism or other means), takes the mail and sorts out the checks. The fraudster then alters the stolen checks by “washing” them and replacing the payee name with a different payee name. The altered checks are then cashed at multiple banks, and the fraudster collects the money.
Counterfeiting. Counterfeit checks include any checks that have been created fraudulently using a business's account information, including a business’s name, address, phone number, bank account number, routing number and signature(s). Fraudsters can then sell that information or print new blank checks to use fraudulently on the business account.
Preventing Check Fraud
Here are several tips for mitigating a business’s exposure to check fraud:
Educate employees about check fraud and risk-mitigation techniques.
Protect the business’s checks and account information. Secure blank checks and limit access to them.
Encourage the use of ACH payments instead of checks.
Don’t use USPS blue boxes for mailing payments; instead, instruct employees to mail from inside the post office. And don’t rubber band mail together. Doing so allows a fraudster to grab multiple checks at once.
Reconcile business accounts on a daily basis. Monitor account activity through online and mobile banking. You can set up transaction alerts to notify you of transactions over a certain dollar amount. The sooner you detect potential fraud and report it, the better your chances of recovering lost funds.
Sign up for and use Positive Pay. Positive Pays helps detect and deter check fraud. It is available through Country Club Bank’s Business Online Banking. Once a business is enrolled, it uploads check details, including the check number, dollar amount and payee information of issued checks. Country Club Bank matches the checks the company issues against those presented for payment. Checks not matching will be flagged as exceptions, and the company makes the decision to pay or return the item. Positive Pay is also available for ACH transactions.
If Your Business Is a Victim of Check Fraud …
Contact Country Club Bank’s Client Support at (816) 931-4060 or contactus@countryclubbank.com. Businesses can also reach out directly to their banker.
Report the fraud immediately to the Federal Trade Commission at www.ftccomplaintassistant.gov.
Contact U.S. Postal Inspectors at (877) 876-2455 or www.uspis.gov to report the theft.
Comments