Check Fraud

Ever since the time money was invented, scam artists have always tried to make a living by parting people (not just fools!) from their money. When coins, gold and other precious items were used as money, the only option was for people to steal it. But with the advent of paper money and banking instruments, scamsters have begun resorting to other dubious means of stealing money. Check fraud is probably the most common technique used by fraudsters. Statistics reveal that I the United States of America alone, the number of cases of check fraud far outweigh all other cases of fraudulent money transactions.

But what exactly is check fraud? And how does one prevent check fraud from happening? Well, in order to answer those two crucial questions, it is necessary to understand how checks work in the first place. When you issue a check to someone, they deposit it in their bank account. Their bank sends this check for clearing to a clearing house. The clearing house verifies with your bank if there are sufficient funds in your account and replies to the first bank. Based on the information received, the bank deposits the amount into the account of the person the check was issued to.

Now check fraud can occur at any or all of these stages. The most common form of check fraud is when someone forges your signature on a check, making it seem like you have issued the check. A slight variation of this kind of check fraud is the endorsement variety, where a stolen check issued by you is endorsed and cashed by someone other than the intended payee. Still other varieties of check fraud involve the use of counterfeit checks which can easily be created by anyone with good design skills, a computer, access to security paper and a fine printer. In fact, the relative inexpensiveness of such high quality equipment has made the job of forgers and check fraud specialists so much the easier.

Think back to the Leonardo Di Caprio film ‘Catch me if you can’. If he could cash thousands of checks worth millions of dollars with relative ease, what prevents more determined criminals from doing so? While most checks have in-built design and security features, this has not prevented perpetrators of check fraud from attempting to copy them. Altered checks also come under the purview of check fraud. In this case the check is genuine, but the intended recipient, the account number or other details could be altered to enable fraudulent activities.

If it goes unchecked, check fraud could prove to be damaging to your business or personal life. Unfortunately, all of us depend in some degree on checks. Therefore, we cannot hope to do away with checks to prevent fraud. The only thing that can be done is to be on high alert all the time and to ensure that no suspicious check is accepted or passed by the bank. Many banks and financial institutions have safety measures in place just to prevent check fraud. But unless you exercise due diligence, you might just become the victim of check fraud.