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Catch Cheque Fraud Before it Catches You

Article Highlights:

  • Recognize common types of cheque fraud.
  • Establish a careful process to help stop cheque fraud.

Just one fraudulent cheque can cost you a large amount of money. Here are three tips to help you avoid being a victim of cheque fraud:

1. Recognize Common Types of Cheque Fraud

  • Counterfeiting – Fabricating or duplicating a cheque.
  • Alteration – Modifying the amount or payee on a legitimate cheque.
  • Forgery – Stealing and then endorsing cheques.
  • Paperhanging – Writing cheques against a closed account.
  • Cheque Kiting – Creating fraudulent balances by passing cheques between two or more accounts and using “the float time” to obtain unauthorized credit from each bank before a cheque clears.

2. Avoid Risks in Your Dealership

  • Lock up your cheques, deposit slips, bank statements, and cancelled cheques.
  • Set your security restrictions to limit access to information, systems, accounts, and records to appropriate employees.
  • Educate your employees about company policies and the consequences of fraud.

3. Establish a Careful Process to Help Stop Cheque Fraud

  • Submit the cheque-issue data file from ERA in your bank’s specific format and electronically transfer the file to your bank on a daily basis. Or you can automate this process with Reynolds Positive Pay, an integrated tool which would eliminate the risk of missing cheques and rekeying errors.
  • Most banks will compare all cheques presented for payment with the data from your cheque-issue ERA file.
  • If they find an exception, the bank will notify you for cheque verification.

How to Catch Cheque Fraud

Follow these steps to help you avoid being a victim of cheque fraud.

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