Knowledge Center

Protecting your Business from 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 your business’s checks.  
  • Check Theft. When someone manages to steal your 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 with 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 your account information, including your 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 your business account.

Preventing Check Fraud

Here are several tips for mitigating your business’s exposure to check fraud:

  • Educate your employees about check fraud and risk-mitigation techniques.
  • Protect your business’s checks and account information. Secure your 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 your 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 you detect and deter check fraud. It is available through Country Club Bank’s Business Online Banking. Once you are enrolled, you upload check details, including the check number, dollar amount and payee information of issued checks. Country Club Bank matches the checks your company issues against those presented for payment. Checks not matching will be flagged as exceptions, and your 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. You can also reach out directly to your 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.



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