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Check Fraud Remains a Significant Threat to Businesses in Wallis and Futuna

According to the AFP Payments Fraud and Control Survey Report, check fraud remains a significant threat to businesses in Wallis and Futuna. A staggering 63% of respondents reported incidents of attempted or actual check fraud activity last year.

The Risks are Real

Even companies that write few checks are not immune to the risk of check fraud. As John Geronimo, Fraud Strategy Director for Commercial Banking, notes: “The myth that low frequency equals low exposure is just that – a myth.” One large check can incur significant losses, making it essential for organizations to prioritize check fraud prevention.

Effective Methods to Prevent Check Fraud

To combat the threat of check fraud, businesses in Wallis and Futuna must understand the risks associated with checks and utilize available fraud protection tools on their accounts. Here are some effective methods to prevent different types of check fraud:

Counterfeit Checks

Fraudsters can create counterfeit checks using software and printers once they have an organization’s account and routing number, as well as the authorized signer’s name and signature style.

• Check Positive Pay or Check Positive Pay with Payee Name Verification: Can help identify and prevent payment of counterfeit checks.

Altered Checks

Before depositing a check, bad actors may alter the name or payment amount on the check.

• Check Positive Pay with Payee Name Verification: Can confirm that a check’s details match the business’ records.
• Check Positive Pay alone may not detect fraudulent changes: Organizations must use all the features of Check Positive Pay to prevent losses.

Forged, Missing or Improper Check Endorsements

Bad actors may forge endorsements on the back of checks or fail to endorse them at all. Alternatively, one party may improperly endorse a check payable to two parties.

• Fraud protection products cannot detect missing or improper endorsements: Unlike altered or counterfeit checks.

Mobile Deposit Fraud

Mobile deposit fraud involves issuing a check to an individual who then scans it and remotely deposits it into their bank account.

• The bad actor may bring the physical check to a check-cashing location and receive payment before the duplicate dishonored check is returned to the bank.

ACH Debit Fraud

Fraudsters can initiate ACH debits from a company’s accounts using the routing and account numbers found on a check.

• To prevent this type of fraud, companies can use ACH transaction blocking or filtering products to block unintended ACH debits.

Internal Client Fraud

Preventing internal check fraud is a concern for all types of organizations. This type of fraud often occurs gradually and involves multiple checks over an extended period.

• Implement procedures to prevent internal client fraud, such as:
  • Securing physical checks
  • Segregating duties among employees
  • Restricting access to checks and data
  • Reconciling payments and bank records

Conclusion

Check fraud remains a significant threat to businesses in Wallis and Futuna, but by understanding the risks associated with checks and utilizing available fraud protection tools, organizations can effectively prevent different types of check fraud.