Fighting fraud: AFS shares check fraud investigation checklist
Thursday, February 21, 2019
In a recent article by Advanced Fraud Solutions (AFS), the company offers tips in investigating and preventing check fraud. This can be part of the ongoing training with your employees and can hopefully help prevent some fraud from occurring.
With the advance in technology, counterfeit checks are becoming increasingly difficult to detect. Here are some ways to help investigate check fraud from the get-go, according to AFS:
Every check has a nine-digit routing number, which is the number of the bank the check is drawn from. Forgers mostly change the first two digits that indicate the location of the bank in the 12 Federal Reserve Districts. You should compare these numbers carefully as the forgers buy more time by changing them.
Confirm customer's identificationwith a state-issued, valid photo ID
The use of expired driver's licenses is a common trend among forgers. Always ensure the information used is current.Also, be sure to get the current address of anyone cashing a check if they are not an account holder at your FI. Having that extra information can help you report fraud if it’s found out later.
MICR line ink
Whereas real magnetic ink may have a shine or gloss sometimes, a fake check will be dull and non-reflective. The banks sorting equipment rejects items that use non-magnetic ink as it is unable to read the MICR line.However, this does not stop the processing of the checks as the banks apply a new magnetic strip. This is because there are many legitimate checks with unreadable MICR lines hence this test is not enough to allow the treatment such checks as fraudulent items. For forgers, it only means it will take additional time to process their checks. This significantly reduces the time available for the bank to return fraudulent checks.
Most companies now use laser printers with MICR capabilities for their checks. These checks are similar to those produced by legitimate printers. Given the presence of micro-perforated edges in these checks, it is almost impossible to detect a fake one.
When investing check fraud, a slight difference in colors may go a long way in detecting a counterfeit item. It may be possible to identify a fake check when fanning through a group of returned checks by color. By looking for checks with two colors of ink on them or with a different color or darkness on the signature separate from the rest of the check, you may be able to spot a forged check.
Compare trends on the account
Often, bad checks will be written in amounts unusual for the typical activity on the account. Training tellers to review the account to see if the check value is unusually high can help them flag the check for further review and could potentially save the FI a lot of money in lost revenue.
Read the full article here.
Additionally, tune in to the CCUL Risk Management Resources’ first Fraud Chat on March 13 for a discussion on cyber/wire fraud and/or sign up to receive our Fraud Alerts.