By now, most small business owners in Illinois know that fraud flourished during the pandemic, from cybercriminals taking advantage of everyone doing everything online, to old-school fraudsters stealing stimulus checks from the mail.
What many people don’t know is that, while businesses have gotten better at thwarting cybercrime, cases of check fraud continue to climb. In a February alert to financial institutions about the rise in mail theft-fueled check fraud, the Financial Crimes Enforcement Network (FinCEN) reported receiving 680,000 Suspicious Activity Reports related to check fraud in 2022, almost double the number from the previous year.
It’s not just the dramatic increase in cases that have gotten FinCEN’s attention, it’s what the perpetrators are doing with the checks they steal. Not content to just cash the bogus checks anymore, criminals are selling copies of stolen checks online and obtaining information from the dark web, like the payer’s account balances, to make the crime more lucrative for them — and more damaging for their victims.
Fortunately, there are relatively simple, quick and inexpensive steps small business owners can take to avoid falling prey to check fraud.
Here are five steps small business owners in Illinois can take to protect themselves:
Anyone who issues a check — whether handwritten, printed or generated from an online banking platform — risks falling victim to check fraud. So the first step small business owners can take is to make electronic payments via ACH or EFT.
One of the most popular methods of negotiating ill-gotten checks is to “wash” them to remove the dollar amount and name of the payee. Once that’s done, anyone can make the check out to a new recipient, for a larger amount, and cash it. Even computer checks can be washed and reused by thieves. If you have to issue a check, write it out using a gel pen, as gel pen ink can’t be removed from checks.
Your mail is vulnerable to theft anywhere outside the secure confines of a postal facility. Thieves can “fish” mail out of mailboxes, use a universal key to open collection boxes, or steal it right off a mail truck or mail carrier. The only way to ensure your checks make it safely into the postal system is to drop them off directly at the post office.
Taking your check to the post office will keep fraudsters from stealing it on your end of the journey, but what about once it leaves the mail facility near the recipient? Positive Pay is a service that deters check fraud from end to end by comparing a check presented for payment with the same check as it was issued by the payer. Byline Bank’s Positive Pay with payee service attempts to match the account number, check number, dollar amount, payee name and date with a check file you provide, and alerts you to any anomalies.
Check your business bank accounts often and be wary of vendors changing payment accounts. Always call your vendors to confirm any change in payment. And, educate your team to be aware of the risks of writing checks, and other activities that they do — off the clock as well as at work — that can put your business in peril.
Taking these steps will help your small business reduce the threat of not just check fraud, but other types of fraud, as well. As a bank that serves many small businesses, Byline Bank is ready, willing and able to help you implement these and other fraud-fighting measures.
We encourage you to be as cyber-secure as possible — but don’t forget about IRL (in the real world) safety, too.
This article Five Steps Small Businesses Can Take To Protect Themselves Against Check Fraud was legally licensed through the Daily Herald. Please direct all licensing questions to [email protected].
The above material has been provided for informational purposes only, and should not be relied on for tax, legal, or accounting advice. You should consult with your own tax, legal, and accounting advisors in addressing any of the above information.