While checks may seem like an outdated method of payment for many of us, the truth is that checks are still vital for both businesses and individuals alike. And despite advanced check security features and processes, such as specialized business check writing software, there still exists the potential for fraud. Check fraud can put both your money and your personal information at risk. But by learning more about the different types of check fraud, you can better protect yourself from this common threat.
Here, we’re taking a closer look at the most common types of check fraud so that you can be armed with the information necessary to protect your funds and personal information from fraudsters out there.
What are the Different Types of Check Fraud?
At its most basic, check fraud occurs when someone attempts to steal funds through the use of a fraudulent or forged check. While it may seem rather obvious and clear, there are actually a few different ways that someone can perform this type of fraud.
Take a look at some of the most common types of check fraud:
1. Theft: perhaps the most obvious here. Stealing and then using someone else’s checks is considered a form of check fraud. If you regularly use physical checks, whether for work or personal use, it’s key to secure them somewhere safe and be wary of who you exchange checks and information with.
2. Forgery: this type of check fraud happens when someone provides an unauthorized signature on a check. It could also occur when someone endorses a check that wasn’t made out to their name.
3. Counterfeiting: counterfeiting is the most common type of check fraud in the US. This involves the creation of fake checks that are then passed off as legitimate checks. Sadly, this is surprisingly simple to do. With just a computer and a color copier, scammers can create fraudulent checks that look just like the real thing and are hard to catch. Some estimates suggest that over 5,000 Americans were victims of counterfeit checks.
4. Washing: through this check fraud technique, scammers use specific chemicals, like acetone, to then remove some of the ink from checks. This allows them to add new, fraudulent information, like their name, to the check.
5. Check Kiting: this sneaky check fraud method incorporates moving money between two different bank accounts. A scammer will first write a check from one count with either zero or insufficient funds. Then, they’ll deposit it in another account, hoping to withdraw those funds before the check clears.
In a 2018 study by the American Bankers Association, data revealed that check fraud is the leading type of fraud committed against deposit accounts, and in 2018, increased to 15.1 billion dollars. In short, that’s a lot of fraud.
While banks and financial institutions continue to develop advanced technology and security measures to protect checks and those using them, scammers also develop more advanced and sophisticated methods to cheat people out of their funds and personal information. That’s why it’s so important to understand the most common types of check fraud.
Preventing check fraud for yourself comes down to three prime factors: protecting your information, protecting your checks, and at the end of the day, common sense. To begin with, never accept a check from someone you don’t know. And if someone ever asks for partial reimbursement from a check or a purchase, always deposit the check first to ensure it’s valid. Cashier checks and money orders are also safer alternatives as compared to personal checks.
While check fraud is clearly a growing threat, you should be able to steer free from any potential hazards if you follow these tips and stay vigilant.
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