Information about Check Fraud

Check Fraud: An Overview


We all know the risks, losses and frustration associated with credit card fraud and identity theft. However, the likelihood of being affected by check fraud dwarfs these risks, and criminals also have a higher likelihood of success.

15 years ago a person would have to understand the printing processes and have a printing press available to be able to commit check fraud. Today, with desktop publishing programs, scanners, copiers and printers, any PC user is capable of committing high-quality check fraud.

Adding to the trouble is the speed at which banks process checks. Banks process over 64 billion checks a year. They are processing checks at 2,500 items per minute. That translates to an average processing speed in excess of 400 miles per hour. Banks cannot possibly review all of these checks thoroughly enough to consistently identify every fraudulent check. With the enactment of Check 21 in October 2004, which has enabled banks to convert checks to electronic images and use these images as substitutes for the real thing, the speed the processing of checks is set to increase significantly over time. Conversion also increases the likelihood of check fraud by truncating the security information that may exist on a real check from the point in time when the check is scanned in the clearing process.

To protect yourself against check fraud you must start with a basic axiom, "trust no one." Remember that even a CPA, attorney, judge, doctor, employee, friend or relative can commit fraud. Anyone is capable of committing fraud.

Next: Basic Check Fraud Statistics

How are you protecting your business from check fraud?

What is your responsibility for losses incurred from check fraud?

Assess your check fraud risk by taking the Check Fraud Risk Assessment Survey