6 Tips to Help Small Businesses Identify Check Fraud

Current estimates have merchant losses to check fraud at nearly $10 billion each year. Those numbers are staggering and one of the primary reasons many businesses have stopped accepting checks altogether. However, if you want to continue extending this courtesy to your customers, it’s a good idea to take active steps to identify and prevent check fraud.


1) Check Identification


It’s a simple step that can stop many instances of check fraud. Not only should you check to see if the name on the identification matches the name on the check, but also check to see that the identification is currently valid. It’s simply another layer of protection for your business that’s worth a few extra seconds.


2) Establish a Check Acceptance Policy for Your Business


Businesses today simply must create and enforce check-cashing policies in order to protect them from the growing problem of check fraud. The policy needs to be publically displayed and all employees must follow it in order for it to be effective. Displaying it publically prevents customers from feeling singled out when the policy is enforced on them.


3) Check the Signature


Make sure the signature on the check matches the signature on the identification and the name on the check. You’d be surprised how obvious some forgeries are when bad checks are accepted. Don’t let this happen in your business.


4) Pay Attention to Customer’s Behavior


Customers passing bad checks, forgeries, or stolen checks will sometimes act nervous or look like they’re preparing to make a hasty exit if needed. These are the checks you want to target for closer inspection to make sure all seems to be in order.


5) Thoroughly Examine the Check


Checks should feel similar to other checks you take. Most checks are presented on paper that has very similar weight and texture. Most check printing companies embed some sort of security features into their checks; be on the lookout for them when inspecting checks for acceptance. Also, notice if there are perforated edges from the checkbook. Most of the time, these edges will be along the top of the check, though some checkbooks feature side tear edges. This won’t necessarily identify forgeries, but it will help identify counterfeit checks.


6) Invest in Business Insurance


Business insurance may not actively prevent check fraud, but it will help to soften the blow when it does happen to your business. No matter how careful you are in the creation and enforcement of your check cashing policy, the odds are not in your favor that your business will never see bad checks. Business insurance helps mitigate the financial impact these checks have on your business.


Prevention will forever be the best cure. Take these steps to prevent check fraud in your business and your risks will be significantly lower than other businesses that accept checks.