Protect Yourself From Cheque Fraud

Security is a very comfortable word. But when it is applied to money it becomes much more intimidating. Many of us are very careful when we carry money, but often we don't think about the exposure we have each time we write a cheque. According to statistics compiled by the National Cheque Fraud Center (www.ckfraud.org), there are more than 500 million fraudulent cheques created each year, which results in annual estimated losses of $10 billion.

Most of us have never been a victim of fraud and so we know very little about it and we feel rather unprepared to defend ourselves against it. The most common way fraudulent cheques are created is by altering the data on an existing cheque. This method is appealing because the existing cheque includes valid bank data as well as a signature.

In order to modify data, cheque frauders erase data and replace the amount or the payee with fraudulent information. The most common way to erase data is by using chemicals that remove ink or by making a color copy of a cheque with specific fields blocked so that they can be filled in on the copied cheque.

Is there a way to protect ourselves from cheque fraud. The answer is YES and it is not that hard to do! First you must address the paper on which you print cheques. Here are some examples of cheque stock features that will help to dissuade the would-be frauder:

1. Chemically treated paper - make sure that the cheque stock you use is chemically treated so that if any known ink solvent is used on the paper the paper will turn black.
   
   
2. Copy prevention features - make sure that the cheque stock you use includes colored/multicolored backgrounds that are more difficult to reproduce on a copier. These background colors should be identified in a warning message on the cheque so that someone can notice if the colors are missing.
   
   
3. Micro printing - as a further deterrent to making a copy of the cheque you can have the border of the cheque or of the amount box be printed as words. The words are so small that they almost look like a solid line to the naked eye. In fact, the words are so small that most copy machines are not capable of making a clear copy of the words that make up the line. This feature must also be documented in a security feature warning box.
   
   
4. Florescent fibers - the cheque stock can have embedded in the paper, florescent fibers that glow when the cheque is exposed to ultraviolet light. The feature warning box must also identify the presence of florescent fibers.
   
   
5. Watermark - A true watermark identified in a feature warning box make it much more difficult for a frauder to copy a cheque.

Although these features are important and useful in deterring would-be frauders there is no way to prevent a resourceful frauder from buying the same stock that you have or being the victim of a careless bank teller who cashes a fraudulent cheque.

The Ultimate Solution: There is an answer to cheque fraud. If you were able to approve each cheque that was drawn on your account you would never cash a fraudulent cheque for many thousands of dollars. And that is exactly what most banks are set up to do today. Most banks refer to this fraud protection program as "Positive Pay." The theory of the program is that each time you print cheques you send the bank a file that is imported directly into their cheque clearing system that identifies all of the pertinent information for each cheque that you write: Payee; amount; date; cheque number; etc. With this information, the bank will not clear any cheque that does not match every one of the key fields of information. One of the main problems with a Positive Pay system is that it is difficult for the customer to produce the Positive Pay File in the exact format that the bank requires.

Some cheque printing software packages have addressed the problem of creating a Positive Pay File by adding a feature that collects all of the pertinent data for each cheque run and saves it in a file that exactly meets the specifications of their bank. A feature like this is the most effective measure that one can take against cheque fraud. If you do not approve each cheque written against your account it simply will not be cashed.

In summary, it is important to be as prudent and careful as possible when you select cheque paper, but if you want to stop cheque fraud you must work in conjunction with your bank through a program like Positive Pay.