How to Avoid Check Fraud

Check fraud is a growing problem for businesses today. Computers are making it easy for some people to create fake checks. Business owners in the hospitality and restaurant fields are at a higher than average risk of check fraud, as are merchants that work in industries where stolen goods can be resold (think electronics). The retail industry loses around $12 billion per year to bad checks-half of which is linked to check fraud. Collecting on bad checks can be impossible. Even though many businesses rely on check guarantee, verification, and collection services, the best way to prevent fraud is to watch out for bad checks. Take these steps to help the cause:

• Set up a check acceptance policy: Define acceptable forms of identification and necessary information that should accompany checks. Set dollar limits for checks.
• Check ID: Make sure that the customer's name, address and phone number are on the check and that they match the ID cards. Verify that the written and numerical amounts on the check correspond. Further, make sure that the customer's ID card is valid and unexpired. Make sure the cashier records their ID number or initials on the check-this is useful in the case of a prosecution.
• Check numbers: The great majority of bad checks are numbered below 500.
• Pay attention to the feel of the check: Most check paper has the same weight and feel. Commercial checks have perforated edges and consistent type styles.
• Skip second- or third-party checks: Keep things simple and direct.