Check Fraud: Types and Indicators - Special Academic Support

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Check fraud has always been one of the ways used by malefactors to acquire additional benefits. It can be defined as any effort to acquire money illegally, using paper or digital checks that are widespread nowadays (Check fraud 101, n.d.). Statistics show that an organization might lose up to 5% of its revenue because of this crime committed by various individuals. For this reason, it remains a serious concern nowadays. Furthermore, the rise of computer technologies contributed to the emergence of new opportunities to commit this crime. For instance, the spread of digital checks and specific applications for working with such documents allowed malefactors to alter them and use fake data instead of real ones (Check fraud 101, n.d.). It increased the topicality of the problem and promoted the need for additional security measures to guarantee no substantial damage is caused by such operations.

The problem is complicated because there are numerous check fraud types, and their number continues to increase. For this reason, investigators usually try to outline the major types of this activity to familiarize clients and specialists with them. These might include check forgery, counterfeiting, altered checks, and paperhanging (Check fraud 101, n.d.). Scammers or thieves usually employ these types as they are comparatively easy and can help to generate income. For instance, forgery can be determined as writing a check by an account holder to buy some time before they will find extra funds (Check fraud 101, n.d.). For a business, forgery usually occurs when an employee issues a check without clear authorization (Check fraud 101, n.d.). It helps to generate specific benefits and ensure a person will have the required time or funds.

Paperhanging is another common type of check fraud that is often used by thieves or persons who have unfair purposes. It implies the purposive writing of bad checks by account holders on their accounts (Check fraud 101, n.d.). A person realizes that the funds placed on his/her account are insufficient; however, it helps to enjoy benefits from the difference in check and the real state of the account (Check fraud 101, n.d.). As a result, extra dividends and time might be acquired. Check kiting is another type of fraud, implying that an account holder can write bad checks linked to his/her account (Check fraud 101, n.d.). The central goal of this action is to deposit these checks in another account to demonstrate a positive balance on the second account (Check fraud 101, n.d.). It might help to conceal the actual situation and avoid problems with reporting the current balance and the state of the account.

Considering the spread of this illegal practice, and the substantial harm done by this type of fraud, it becomes vital to detect bad checks and report possible unlawful activity. Specialists working in the sphere offer several ways to achieve the goal. For instance, inconsistent handwriting might be the first indicator of a bad check (How to spot an altered check, n.d.). If there are any differences in handwritten details, it is possible to start an additional investigation to guarantee the check is legal.

Another indicator of potential check fraud is visible signs of alteration found in a check. Following the existing recommendations, tellers should look at the amount or payee name (How to spot an altered check, n.d.). If any signs of alteration or erasure marks are seen, it is vital to initiate a more detailed investigation to ensure there are no illegal activities. It is also possible to contact a bank to ask if the check is correct. Finally, it is vital to increase customers awareness about the necessity to protect their checks. One of the ways to avoid check fraud is to prevent thieves from stealing them. For this reason, it is critical to educate customers about the necessity to keep their checks safe and avoid their use by third parties (How to spot an altered check, n.d.). It will guarantee a high level of security and help to protect institutions from potential financial losses.

Moreover, there are some specific ways how business managers can curb potential check fraud. First of all, it is vital to use software that automatically checks frauds and ensures they are not altered (Check fraud 101, n.d.). It significantly reduces the chance of successful fraud and helps the organization to save money. Second, managers should increase their awareness about check fraud and how malefactors might use this document to attain their purposes (Check fraud 101, n.d.). It would help to detect possible cases and report them.

Another critical insight offered by the website is using additional tools to mark checks and ensure a high level of security. Putting a seal or unique barcode on every document will help to acquire vital information once it is scanned (Check fraud 101, n.d.). For business, it might become an excellent solution as it will contribute to the reduced number of frauds and ensure the company will not suffer from severe financial damage. Altogether, check fraud remains one of the critical factors affecting the work of banks, financial institutions, and the business sector. For this reason, it is vital to realize the major types, signs, and methods to detect this activity and avoid undesired outcomes.

References

Check fraud 101. (n.d.). SQN Banking Systems. Web.

How to spot an altered check. (n.d.). SQN Banking Systems. Web.

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