Check Fraud: A Growing Concern

Checks continue to be an extremely vulnerable target for payments fraud. Although the number of electronic payments surpassed checks in 2004, the real statistic is that checks are still an extremely popular form of payment for businesses and are still being used for a large portion of high dollar transactions - making them arguably more vulnerable than other payment methods to devastating fraud attempts.

Check-related fraud continues to remain high, according to banks, industry groups, and fraud experts alike:

  • * According to the 2014 AFP Payments Fraud and Control Survey, checks remain the payment type most vulnerable to fraud attacks, with 82% of organizations affected by payments fraud reporting that checks were targeted.

  • * According to the 2013 Federal Reserve Payments Study, checks (consumer and business) were the payment instrument with the highest average value of unauthorized transactions in 2012. The average unauthorized check transaction was valued at $1221, as compared to ACH at $730, ATM withdrawals at $217, general purpose credit cards at $138, and general purpose debit cards at $105.

  • * According to the 2013 ABA Deposit Account Fraud Survey, fraud against bank deposit accounts cost the industry $1.744 billion in losses in 2012, with debit card fraud accounting for more than half of 2012 losses (54 percent), followed by check fraud (37 percent).

Battles fought after check fraud losses have occurred are often difficult to win. The best solution is to consistently stay on alert and proactively take steps to prevent check fraud at all stages of your organization's check processing.


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Evaluate your risk for check fraud with our complimentary Check Fraud Risk Assessment.


Preventing Check Fraud

Preventing check fraud requires implementing fraud prevention technology and best practices:

1. Use a High-Security Check Printing System

Whether you need to print checks to a single printer, to multiple printers across your network, or to remote locations (via the internet), check printing technology has evolved to offer a suite of advanced security features that address today's check fraud concerns.

A Check 21-compatible Security Watermark feature along with other printed check security features, such as reverse and micro fonts are available with the SecureCheck 8 MICR Check Printing System and APSecure-RCP Remote Check Printing System.

In addition, both SecureCheck systems provide a host of internal controls for fraud prevention that can be securely managed from the Printing Control Center (PCC) to meet your organizations specific requirements for security and SOX Section 404 regulatory compliance: audit trails, event logs, user permissions, email notifications regarding check printing activities, workflow/check-approval processing prior to check printing, electronic check-image archiving, and more.


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SecureCheck 8 MICR Check Printing System

APSecure-RCP Remote Check Printing System


 
2. Use High-Security Blank Check Stock

Blank check stock has the advantage of being void of all check information aside from the check's many security features, which protects your organization against check alteration and duplication attempts.

TruPrint blank check stock is economical and offers numerous built-in security features for check fraud prevention: void pantograph, fluorescent fibers, microprinting, black/blue dyes, warning borders, multi-language brown stain void, watermark, more.


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TruPrint Security Check Stock


 
3. Create a Positive Pay Partnership with Your Bank

Positive pay is considered an essential best practice for check fraud prevention. Positive pay forms a partnership between you and your bank by having the bank validate every check it receives for payment against a check issuance file you provide. Discrepancies are flagged for your review and approval prior to payment being made.

Implementing positive pay helps your organization meet UCC Uniform Commercial Code) standards of ordinary care for fraud prevention and gives you leverage to fully recover losses in the event of a check fraud incident.

Positive Pay Software
Creating properly formatted positive pay files and automating regular transmission of files to your bank can be done quickly and easily with positive pay software.

SecurePay is the nation's leading positive pay solution. 8 of the 10 leading U.S. commercial banks currently recommend SecurePay to their customers for rapid and economical implementation of positive pay protection.


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SecurePay Positive Pay Software


 
4. Implement Best Practices for Check Fraud Prevention

Your organization should implement best practices for preventing check fraud:

  • Daily account reconciliation
  • Post no debit flags on zero balance or depository accounts
  • Controlled access to company payments areas and systems
    Consistent system password updates
  • Awareness of payment procedures and security risks during employee vacations and turnover
  • Knowledge of your bank's check destruction policy, imaging system, and check fraud detection practices
  • Knowledge of check stock security features, including developments in the area of image-survivable features

In today's changing payments landscape, the most effective check fraud prevention planning combines best-of-class technologies that offer state-of-the-art security features with the best internal practices for secure accounting.


If you have questions, please contact us at 1-800-652-2877.

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