Check fraud, once a relatively low-tech crime, has evolved to become a sophisticated threat to businesses of all sizes. From simple counterfeit checks to complex schemes involving stolen identities, businesses need to be vigilant to protect themselves. 

Understanding the Threat

Check fraud can take many forms, including:

• Counterfeit Checks: These are forged checks that look like legitimate checks.
• Forged Endorsements: Criminals alter or add endorsements to checks to divert funds to unauthorized accounts.
• Check Washing: Fraudsters use chemicals to alter the payee or dollar amount on a check.
• Identity Theft: Criminals use stolen personal information to create fraudulent checks.

Best Practices to Protect Your Business

1. Implement Strong Internal Controls:

• Segregation of Duties: Ensure different employees handle different parts of the check processing process, such as receiving, endorsing, and depositing checks. This can help with avoiding internal fraud.
• Regular Reviews: Conduct regular reviews of bank statements and check registers to identify discrepancies and unauthorized transactions. Identifying unauthorized transactions quickly can help with avoiding or minimizing financial losses.
• Secure Check Storage: Store blank checks in a secure location, and limit access to authorized personnel. And doing a periodic audit will help to ensure protect controls are effective.

2. Use Check Verification Services:

• Remote Deposit Capture (RDC): This technology allows you to scan and deposit checks electronically at your business location without the need to transport or mail check deposits to the bank. This service can also automate and standardize endorsements thereby reducing the risk of physical theft and fraud.
• Check Verification Services: These services can help identify counterfeit checks and fraudulent activity. Some RDC solutions also incorporate check duplication when scanning deposits.

3. Educate Your Employees:

• Training: Train your employees to recognize the signs of check fraud, such as unusual endorsements, altered amounts, different check stock, or suspicious senders. Look for security features on checks, such as watermarks, microprinting, and holographic images.
• Verification Procedures: Establish clear procedures for verifying checks, including checking the payer's information, the bank's address, and the check's routing number.

4. Report Fraud Promptly: If you suspect check fraud, report it to your bank immediately. 

By implementing these best practices, you can significantly reduce your risk of falling victim to check fraud. Remember, staying informed and taking proactive measures are crucial in today's evolving threat landscape.