A corporate check refers to a check that is issued by a corporation or business entity. Check fraud is a type of financial crime involving using fraudulent checks to obtain money or property from a person or company. Corporate check fraud can occur in several ways, including forged signatures, altered check amounts, and counterfeit checks. This article will discuss four countermeasures against corporate check fraud.
1. Enforce Check Policies and Procedures
One of the best ways to prevent corporate check fraud is to have strict policies and procedures for issuing and signing checks. All employees responsible for issuing or signing checks should be adequately trained on these policies and procedures.
Any deviations from the policies and procedures should be immediately investigated. This includes, but is not limited to, discrepancies in the check amount, discrepancies in the signature, and discrepancies in the date. If any irregularities are found, they should be promptly addressed. Some of these policies include the following:
- Requiring two authorized signatures on all checks
- Check amount limitations
- Payee verification
- Proper check storage and security
The use of laser printer checks, watermarks, and microprinting can also make it more difficult for criminals to forge corporate checks.
2. Use Positive Pay
Positive pay is a check fraud prevention method that involves matching the issued checks against the checks presented for payment. With positive pay, the check issuer provides the bank with a list of issued checks. The bank then compares this list to the checks presented for payment.
If there are any discrepancies, the bank will contact the issuer for further instructions before approving the payment. This helps ensure that only legitimate checks are paid out and that fraud is caught and stopped.
3. Use Two-Factor Authentication
Two-factor authentication is another effective way to prevent corporate check fraud. With two-factor authentication, the check issuer must provide two forms of identification to sign the check.
Two-factor authentication could include a driver’s license and a fingerprint, or a password and a physical token. This added security layer can help prevent fraudulent checks from being approved.
4. Verify Signatures
Another way to prevent corporate check fraud is to verify the signatures on all issued checks. This can be done by comparing the signature on the check to the signature on file for the authorized signer. If there are any discrepancies, the check should not be honored. Signatures can be checked through the following:
- Check Authentication Programs: These programs use special equipment to verify the authenticity of signatures.
- Signature Verification Services: These services compare signatures against a database of known signatures.
- Signature Guarantee Programs: These programs guarantee that the signature on a check is genuine.
In conclusion, corporate check fraud is a serious problem that can be costly for businesses. These are just a few of the many ways that corporate check fraud can be prevented. By taking these precautions, businesses can protect themselves from this financial crime.