Booksellers Warn of New Check Fraud

February 06, 2007

ABA member booksellers have recently notified the association about a check fraud scam that appears to be growing. The scam involves a check to a vendor that is stolen prior to reaching its destination. The perpetrator alters either the check amount and/or payee information and then finds someone who will cash the check and send part of the payment back to the scammer.

Check fraud is becoming all too common, according to the National Consumers League (NCL), which recently released its annual lists of the top telemarketing and Internet scams plaguing consumers in 2006. According to NCL, Fake Check Scams topped the Telemarketing Fraud list and ranked third among Internet-based scams. This type of crime has been on the rise since 2003, when NCL created a category for the scam in its fraud database.

According to the National Check Fraud Center, "Businesses are the primary targets of check fraud professionals.... As far as counterfeiting and alteration, payroll checks appear to be a favorite although all forms of business checks are targets from time to time and all forms of fraud techniques are practiced as well."

The following are some check fraud tips from the Fraud Center:

• Use an established, respectable source to order checks and deposit slips, especially those recommended by your bank, to ensure your checks will process easily through the bank's clearing system.
  
  
• Make sure that your checks include security features that will help combat counterfeiting and alteration.
  
  
• Notify your check supplier (and financial institution, if necessary) if a new check order has not been received within a reasonable amount of time after you ordered them.
  
  
• Maintain adequate physical security of your checks, deposit slips. Secure all reserve supplies of checks, deposit slips, and other banking documents in a locked facility.
  
  
• Require more than one signature on large dollar check amounts. In this way, any losses you may incur will be low denominations only.
  
  
• Reconcile your account promptly and regularly -- quick fraud detection increases the likelihood of recovery. Businesses that do not balance their accounts in a timely fashion can find themselves liable for losses (check with your bank on how long you have to report fraud).
  
  
• Use maximum dollar amounts on accounts to limit large denomination losses by authorized or unauthorized persons.
  
  
• Use Positive Pay. This type of payment system records pertinent information about each check, such as the amount, the check number, bank information and date, and then transmits it to the bank to be verified, before the check can be paid.

For additional check fraud prevention tips, visit www.fraud.org/. In addition, the Office of Comptroller of the Currency has published (in PDF format) Check Fraud: A Guide to Avoiding Losses.

Booksellers who have been victimized by check fraud should forward the appropriate written documentation to the U.S. Secret Service, Financial Crimes Division, 950 H St., NW, Washington, DC 20001, or call (202) 406-5850.

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