Check Fraud is On the Rise: What You Should Know

Check Fraud

FinCen Alert, February 27, 2023

According to the Financial Crimes Enforcement Network (FinCEN), mail theft-related check fraud is surging. At the start of 2023, experts estimated that check fraud had the potential to reach $24 billion or more.

Here are a few ways insureds can protect themselves against forgery losses:

  • Avoid using community mailboxes to mail checks. Instead, go to the post office or use mailboxes in locations with restricted access. Send larger checks by registered mail.
  • Use a positive pay system to protect your accounts payables and accounts receivables.
  • Use dark “indelible” ink to write checks that can't be easily erased or covered over, such as black gel inks, archival ink, or oil-based ink.
  • Review your bank statements frequently to spot inconsistencies. Most banks only allow 60 days to report fraud. Know your banks' liability and policies.
  • Have two individuals review checks to mitigate alterations. Use surprise audits and look for any disbursement or deposit irregularities.
  • Consider having different accounts for different functions, for example, one for payroll, one for accounts payable, cheque issuance etc. for easier reconciliation.
  • Follow up with vendors to see if payments have been received.

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