The 4 Common Types of Check Fraud and Best Practices for Protection

Christy Quesenbery, Executive VP of Operations at Village Bank, has over forty years of experience in banking. She claims, “I’ve seen tremendous change in the industry. But the thing that has remained is check fraud. Except now, the bad actors’ tools have become much more sophisticated.” Christy’s intention is not to scare the public of the multi-faceted threat that check fraud poses, but to reiterate the importance of safety in banking.

There are four primary types of check fraud – counterfeit checks, forged signatures, check alterations, and account takeovers.

• Counterfeit checks, as the name suggests, is the manual creation of a fake check and MICR line (this is the line on the check with routing and account numbers). With banking technology in a constant state of evolution, this form of check fraud is making it easier to fabricate checks with the purpose of stealing your money.
• A forged signature is an instance of check fraud where the check itself may be legitimate, but the signature has been either completely fabricated or otherwise faked in some way.
• Check alteration is another example of check fraud that takes place on a legitimate check, but the person to whom the check is payable is altered. Everything seems in order from the check payer’s perspective, but of course, the actual check recipient doesn’t receive their payment. “What we find are checks have been stolen from the USPS blue convenience boxes where the criminals have a good check, change the payee and process the check to the new payee” says Christy. Recently, the USPS has alerted the public to criminals stealing from their blue boxes. The Bank advises its customers to use USPS offices or consider online banking bill pay and ACH payments.
• The last main kind of check fraud occurs during an account takeover. Obviously, having one’s banking credentials stolen presents a myriad of other problems. But among them, the ability to create seemingly legitimate checks at will remains one of the biggest threats.

The most common targets of check fraud are businesses, rather than personal accounts. “This relates back to the blue box robberies – businesses that regularly pay expenses with checks this way are often targeted. It doesn’t even have to be big companies that write a lot of checks. Small, local ‘mom and pop’ shops are targeted just as frequently,” says Christy.

The consequences of falling victim to check fraud are serious; Village Bank will always help those who have been affected. Christy continues, “People might be embarrassed to report fraud or that they gave someone their personal information, but they shouldn’t be! It can happen to anyone!” Christy goes on to offer some ways to protect one’s self against check fraud. “Safely and securely store all your personal documents. Don’t leave them in your car. Shred any sensitive documents rather than throwing away. Use ACH – automated electronic transfers – for payments if the opportunity exists to eliminating writing checks.”

Beyond general safeguarding of personal documents, Christy details best practices for safeguarding actual checks. “Only order checks from reputable sources; trusting your check vendor is important.  The Bank will order checks for customers at their request.  Keep your checkbook in a safe secure place and monitor its usage daily. If you have to mail a check, mail them from a USPS office – avoid the blue boxes.”

When writing a check, use the following guideline to deter alterations. “Firstly, use a gel-based or permanent ink pen. These kinds of pen are harder to alter and harder to wash off.” Christy continues, “Write clearly and legibly. Fill out all fields completely and avoid using any abbreviations. If there’s a space between the written dollar amount and written cents amount, draw a long flat line between them. Anything you can do to avoid providing opportunities for alteration.” Most importantly, monitor your accounts.  Report anything suspicious to the Bank.

Shifting into the digital banking space, there are additional precautions Village Bank customers can take to protect themselves against check fraud. When asked about this, Christy responded, “this is what is so great about the current banking industry – online banking! I understand physical checks are the preferred method of payment for many, but Village Bank offers many online tools.” Personal accountholders can enroll in the Credit Manager with Village Bank to monitor and freeze credit. Businesses, too, should utilize online banking and regularly monitor their account activity.  As well, Businesses can enroll in Positive Pay, Village Bank’s solution to deter check fraud.

Lastly, if check fraud is suspected, “Contact Village bank immediately. And always, always file a police report, no matter the amount,” says Christy. Using these precautions and guidelines, customers of Village Bank can feel safe and educated regarding check fraud.