| by Connie R. Edwards, Georgia SBDC Check fraud is a rapidly growing problem that results in billions of dollars in losses to businesses. It causes more than 10 times the amount of losses attributed to credit card fraud, automated teller machine theft, burglary, and bank robbery combined! Experts expect that check fraud will grow by more than 25% per year for the next several years. New technology has made it easier for criminals to quickly generate counterfeit checks using stolen or fictitious information. This process includes criminal activities such as financial identity theft, forgery, stolen checks, and fictitious/altered identification cards. Losses from check fraud can tremendously impact the small business owner. The loss includes not only the amount of the fraudulent check(s) but also administrative time and paperwork, considerable aggravation and worry, and the cost of any efforts to recover the lost funds. Constant communication between managers and employees concerning fraudulent activities and how they can be prevented can significantly reduce losses from check fraud. The Coastal Empire Alliance Against Fraud lists several indicators of possible fraudulent activity. The presence of any of the indicators listed below does not necessarily mean that fraudulent activity is taking place. But these may warrant further investigation and validation to guard against fraud. Indicators concerning the customer:  Is the customer the same person whose picture appears on the identification card?
Does the customer appear to be attempting to distract the salesperson from evaluating the transaction? Is the customer evasive? Does the customer not answer? Does the customer appear unsure of the answers about personal information (address, phone number, date of birth, etc.)? Does the customer appear overly friendly or nervous? Indicators concerning the identification card: Is the picture on the identification card the same person as the customer? Ensure that the picture is squarely cropped and does not have raised edges. Has the identification card been recently issued? Recently issued identification cards with an out-of-state address should be considered suspicious and warrant further validation. Is the state seal, hologram, or commissioner's/governor's signature missing? Is the font on the identification card consistent? Different fonts, weak print, and broken characters are often characteristics of fraudulent identification cards. Is the identification card mutilated or altered? Indicators concerning the check: Most counterfeiters lack the ability to print their checks with magnetic ink (MICR Line Ink) used by financial institutions and automated check verification systems to read the check. Checks that can not be read by an automated check verification system should be further investigated prior to acceptance. discount hotels in Warsaw The check lacks perforations. The check number or the "date" line is missing. The check is printed on poor quality paper. The address of the bank, the issuing company, and the customer's state of residence are all different. Hand written additions have been made to the check or information on the check has been erased or altered. The check contains poor print quality with broken characters. The security features normally noted on the face of the check (usually across the top of the check or under the maker's signature) are missing. Small business owners should take advantage of the fraud-deterrent devices, training programs, and other tools available to reduce fraud at the point of sale. Also, one of the best strategies for combating fraudulent activities is cooperation and timely communication among merchants. Many areas have local merchant organizations in which merchants and other types of businesses work together to prevent fraud and reduce business losses. For additional information on preventing fraud and on local merchant fraud prevention organizations, contact your local Small Business Development Center. > See also: Risk Management | 
