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Check Fraud / Counterfeit Checks

Check fraud is one of the largest challenges facing businesses and financial institutions today.  Affordable software and hardware and other advancements in computer technology are making it easier to duplicate checks or fabricate new ones.  A significant amount of check fraud is due to counterfeiting through desktop publishing software, color copiers, and high-quality printers.  In addition, chemical alteration is used whereby the criminal removes some or all of the information and manipulates it to their benefit.

Below are some signs which may indicate a bad check, particularly where multiple signs are present:

• A check printed on poor quality paper that feels slippery.
• Check colors that smear when rubbed with a moist finger. (This suggests they were prepared on a color copier).
• A personal check that has no perforated edge.
• A check on which information shows indications of having been altered, eradicated, or erased.
• A check drawn on a new account that has no (or a low) sequence number or a high dollar amount.
• A check on which the name and address of the drawee financial institution is typed, rather than printed, or that includes spelling errors.
• The customer's name and address is missing.
• Numerical and written amounts do not match.
• The MICR numbers are missing. (NOTE: Magnetic Ink Character Recognition or MICR refers to the numbers at the bottom left-hand corner of a check, printed in magnetic ink that can be read by machines. The numbers usually are encoded with the routing number of the financial institution, the account number, and the check number. The dollar amount is added to the MICR line during check processing. The nine-digit number between the colon brackets on the bottom of a check is the routing number of the bank on which the check is drawn. The first two digits indicate in which of the 12 Federal Reserve Districts the bank is located.  It is important that these digits be compared to the location of the bank because a forger will sometimes change the routing number on the check to an incorrect Federal Reserve Bank to buy more time.) 
• The MICR encoding at the bottom of the check does not match the check number.
• The MICR coding does not match the bank district and the routing symbol in the upper right-hand corner of the check.
• The word “VOID” or “non-negotiable” appears across the check.
• The check lacks an authorized signature.
• A signature that is irregular-looking or shows gaps in odd spots. 
• Corporate or government checks which show numbers that do not match in print style or otherwise suggest that the amount may have been increased. 
• Checks presented at busy times by belligerent or distracting customers who try to bypass procedures.

For Businesses - Some Things to Consider

• Authenticate the check – (1) call the issuing bank to verify the account, (2) call the issuer to verify that the check is real, use phone numbers from an independent source (not off the check), i.e., Internet, phone book, etc.
• If you are cashing a United State Post Office Money Order, go to http://www.usps.com/missingmoneyorders/security.htm to read about the security features of an authentic USPO money order.  You can also download a notice/brochure that identifies the USPO money order security features – go to http://www.usps.com/cpim/ftp/notices/not299/welcome.htm.
• Train your tellers/customer service representatives/cashiers to identify potential fraud.  When fraud occurs, use your experiences as a training tool.
• Consider investing in UV counterfeit detection scanners.  These devices read hidden UV security features built into currency, checks, travelers checks, money orders, credit cards, drivers licenses, passports and government checks.
• Consider any available fraud software/databases that may help to deter losses.

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