Retail Check Fraud
How to Inspect a Check
Counterfeit checks, NSF checks, stolen checks -- these are just a few contributors to retail check fraud. Learn how to inspect a check to avoid bad checks at your store.
Bad checks are a big problem for stores that accept checks from customers.
There are some great new technologies available to help stores accept checks, but a good old-fashioned inspection of a check is still essential.
Checks are rich with information and each bit of information on a check might be a tipoff that a customer is writing a bad check.
Information on checks includes such items as customer name and address, the name and location of the issuing bank, the date, the amount of the check (both as a number and written out), and the check writer's signature.
By closely examining key items on a check, you can sometimes get a tip off that a customer is trying to give you a worthless check.
Before accepting a check from a customer, always look for the following:
- Date -- Examine the date for accuracy of day, month and year. Do not accept the check if it's not dated, if it's postdated or if it's more than 30 days old.
- Time of Year -- October through February is the peak time of the year for retail check fraud. During these months, you have to be more vigilant than ever in watching out for bad checks.
- Location -- After checking the date, be sure that the check shows the name, branch, town and state where the issuing bank is located.
- Issuing bank -- Use extra care in examining a check if it is from a nonlocal bank or from a bank you have never heard of. If the issuing bank is not local, be sure to for identification. List the customer's local and out-of-town address and phone number on the back of the check.
- Amount -- Be sure that the numerical amount agrees with the written amount.
- Legibility -- Do not accept a check that is not legibly written. It should be written and signed in ink and must not have any erasures or written over amounts.
- Low check numbers -- Be more cautious with low sequence numbers. Industry lore suggests that more of these checks are returned. Most banks that issue personalized checks begin the numbering system with 101 and number in sequence when a customer reorders new checks.
- Customer Name -- Watch out for the obvious, such as a man giving you a check where the account holder's name is clearly that of a woman. In addition, always ask for photo id and confirm that the customer is indeed the person listed on the check.
- Endorsements - Never accept a check that appears to be payable to the customer that the customer wants to endorse over to you.
- Payee -- When you take a personal check, have the customer make it payable to your firm. Special care should be used in taking a two-party check.
- Amount of purchase -- Personal checks should be for the exact amount of the purchase. The customer should receive no change or extra cash over and above the purchase price.
- Checks over your limit -- Set a limit on the amount you will accept on a check. When a customer wants to go beyond that limit, your salesclerk should refer the customer to you. How do you calculate the check limit. Typically, it is based on the amount of your average sale.
- Amount of check -- Most people who pass bad checks do so in the $25 to $35 range, on the assumption that the retailer will be more cautious when accepting a larger check.
- Type of merchandise purchased -- Be aware of the type of merchandise purchased. Selection of random sizes or items, or a customer's lack of concern about prices may suggest that caution be used in accepting payment by check.
There are a variety of factors that are making it easier for scammers to attempt retail check fraud.
Smart retailers will be on their guard for check fraud...now more than ever before.
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