What is Check Fraud?

Although check fraud is not as widespread and publicized as credit card fraud, it is still one of the challenges facing consumers, businesses which accept checks and financial institutions. Many consumers still carry and write checks at the grocery stores, schools, and other businesses and any lack of proper security practices around check handling can cause challenges for many parties involved in the fraudulent transaction.

Checks are nowadays easy to be counterfeited by fraud criminals who happen to be individuals or a group of professionals because of the advancement in computer software, scanners and printers which make it easy for fraudsters to create exact copies of checks while changing the desired elements to deceive innocent victims who accept the bad checks in exchange for goods or cash money. With a lack of proper safeguards, checks can be obtained from banks, homes, cars, purses, and even trash cans if cashed or cancelled checks are discarded without being shredded. The stolen checks can then be used to create the fake checks.

There are many laws which provide provisions for prosecution and punishment for the check fraud criminals. Although the crime is pretty straight forward, there is a slight provision in the definition which may surprise some. As you know, Non-Sufficient Fund or NSF checks are checks which are written and given to businesses when there is not enough cash in the bank account. The NSF checks do not fall under the fraud laws. However, if a person writes an NSF check for a Cash on Delivery or COD order, then the act falls within the bad check laws. The person who signs the check is usually the guilty party of a fraudulent check and not the person who actually writes the check. The guilty party could also be the person who delivers the check or a third party who endorses and passes the bad check to another party.

As you can see, it is easy to be classified as a criminal if you sign, deliver, transfer and even write an NSF check for COD purchases. The penalties for writing bad checks include reimbursement of the check amount, imprisonment, and court fees. Visit the National Check Fraud Center for penalty details.

In order to help prevent fraudulent check writing, it is important that everyone protects the blank, cancelled, endorsed, and cashed checks. Blank checks should be secured at all times and must not be carried around unnecessarily. It is also very important to shred all cancelled and used checks before placing them in the trash bins. Usually, merchants who accept checks have great check security controls because for them the checks are like cash which need to be deposited into the bank account. However, once banks receive the deposited and mailed checks or scanned copies of the checks, they need to apply security practices to protect and properly destroy the processed checks. Sometimes, consumers and bank employees throw away the good with the bad which can be dangerous. For example, the envelopes which contained the checks should not be treated the same way as the checks. After the checks are processed, they need to be immediately shredded or placed into a secure trash bin to be shredded later.

Read additional check fraud tips.

Identity Management Certifications

Identity Theft Courses