Check fraud remains one of the highest fraud concerns for businesses, and continues to be a worry this winter season. Check fraud and check washing (a type of check fraud) have been steadily increasing, putting business owners’ bank accounts and money at risk.
Here is some insight into this type of fraud, as well as what steps you can take to protect your business against check fraud and check washing.
What is Check Fraud?
Check fraud is one of the oldest and still most common ways that scammers attempt to steal money. Paper checks are easy targets for criminals. Since they’re passed hand-to-hand on their way to payment, they can easily be stolen, duplicated, altered or cashed illegally.
One common way a scammer can commit check fraud is through obtaining blank or cancelled checks. If checks are not being securely stored, someone can steal the blank checks and illegally cash funds.
What is Check Washing Fraud?
Another way check fraud happens is when a check is intercepted by a scammer, who then washes it. If your business account information is on the check, it gives the scammer an opportunity to alter the amount and change the recipient. As of late, check washing scams are increasing in frequency, as many businesses are reporting this type of check fraud happening to them.
How are checks washed? Fraudsters will use chemicals to gently lift the pen marks or ink on the check, and change the balance of the check.
How are fraudsters getting ahold of checks? Fraudsters are targeting standalone mailboxes and business mailboxes. If you are mailing physical checks, fraudsters frequently check mailboxes for any outgoing or incoming checks.
How to Avoid Check Washing and Check Fraud
So, how can you prevent a fraudster from stealing a business check and using it fraudulently? Here are some practical ways you can avoid becoming a victim of check fraud, prevent check washing, and protect your finances.
If You Are Still Using Paper Checks, Store Them in a Secure Location
Leaving your checkbook out in the open is never a good idea. Make sure to keep any blank checks, cancelled checks and bank statements locked up and stored in a secure spot. Consider using a safe or lockbox.
Reduce Paper Check Usage
Are you ready to cut out checks altogether? Many financial institutions offer alternative ways to issue payment, instead of writing checks. A smart and efficient way to pay vendors and to do payroll is through ACH. ACH offers a secure, efficient and easy way for you to issue payments without the risk associated with paper checks.
The Treasury Management team at Blackhawk offers ACH services for businesses, so you never have to worry about checks being intercepted and washed.
Avoid Standalone U.S. Postal Service Boxes
Currently, scammers are targeting standalone U.S. Postal Services boxes, as well as your own personal mailboxes. If you do need to mail a check, make sure to drop the check off at a USPS location, so that it is not sitting for a scammer to find.
Many banks offer Positive Pay solutions for businesses, which is a way to ensure that the checks being presented for payment are legitimate before they get paid.
We offer Check Positive Pay, which is an extra layer of security for businesses. Positive Pay allows businesses to double-check issued checks before they are paid, reducing the overall risk of financial loss.
When it comes to protecting your business against fraudsters, it is a team effort. You need a banking partner who you can trust to lookout for your business and help keep your hard-earned money safe. At Blackhawk, we want to help you navigate through the many seasons of business ownership, and help set your business up for success for years to come. Contact us today to learn more.
Want to learn more about Treasury Management and how it can help your business? Click here.
Member FDIC | Equal Housing Lender
VP-Senior Treasury Management Officer