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Tips for Tackling Check Fraud

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Loss Prevention Precautions for Retailers

"NSF," "Account Closed," "Counterfeit" -- each time retailers see these words on a returned check, they know they have lost money. According to the National Check Fraud Center, check fraud and counterfeiting are among the fastest growing problems affecting the U.S. financial system.

Estimated annual losses from check fraud and counterfeiting exceed $10 billion and increase every year. There were over 3 billion re-presented check entries processed through the automated check clearinghouse network in the fourth quarter of 2000, according to the National Automated Check Clearing House Association.

Checks account for approximately one-third of retail spending and they are one of the most popular form of payment, second only to cash. Because of their popularity retailers cannot afford to lose business by refusing to accept checks.

However there are some precautions retailers can take when accepting checks that will help combat check fraud.

TeleCheck, a leading provider of check services, offers these recommendations to combat check fraud:
Establish a check acceptance policy detailing acceptable forms of ID, required information and dollar limits and make no exceptions to the policy. Fraud artists are skilled at creating hassles or confusion that can leave businesses stuck with a bad check.

When accepting a check, make sure a name, address and phone number are printed on the check and the written and numeral amounts correspond.

Pay attention to the "feel" of the check; most check paper has the same weight and texture.
Watch the check-writer sign the check and have the customer print the name below, if the signature is illegible.

Compare the signatures, photo and physical description of the ID with that of the check writer.
Check the driver's license, which should be smooth all over with no ridges that indicate an alteration or modification. Verify that the ID is still valid.

Ninety percent of returned checks have low check numbers (100 to 500). While low check numbers indicate a recently opened account and a potentially more risky check, particularly for business or dba ("doing business as") checks, that is not always the case.

More useful information on the check is the account's opening date (month and year), usually indicated by four numbers to the side of the account holder's name and address.
Don't accept second-party or third-party checks.

The four-digits following the magnetic ink character recognition (MICR) number at the bottom of the check should match the four-digit number at the top right hand of the check.
All checks, except government checks, should have a perforation along one side of the check.
You can try calling the financial institution to confirm if funds are available, but there is no guarantee that the check will clear.

Use a check guarantee or verification service.

Writtten by From Melody Vargas
From About.com

Contact one of our Sales Reps on how to prevent check fraud.

Call 866-617-8181 or send email.


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