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Cheque fraud
If your business ever deals with cheques, it could be a target for fraudsters.
In this guide, we look at how common types of cheque fraud can happen. We also explain what you can do to avoid them.
Tips to beat cheque fraud
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This kind of scam has a fairly simple method and can happen to any kind of business.
Fraudsters pretend to be a new customer - They get in touch to order goods or services and offer to pay direct to your bank account.
They pay more than they owe - Instead of sending a payment to your account, they pay in a cheque for more than the value of the invoice.
Then want a refund - The fraudster says it was a mistake and asks for an urgent refund. They want the difference between the cheque they paid in and the invoice – this is the overpayment.
But you can’t cash the cheque - The problem is the cheque is counterfeit or stolen, but you won’t know that until the bank returns it unpaid. By then it’s too late as you’ve already refunded the fraudster and lost the money. And sometimes you’ve even sent the goods or provided a service, so you lose even more.
How to protect your business
There are three things your business can do to avoid this scam:
- Be suspicious of overpayments - especially from new clients.
- Talk to your bank - to find out exactly how the overpayment was made.
- Make sure a cheque has cleared - ask your bank if it’s definitely been paid.
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If a fraudster gets their hands on a genuine cheque from your business, they can use it to try to steal money.
Unused cheques only need a forged signature to become a threat. If a cheque has already been filled in, a fraudster could change the payee name. It’s also a scam if a payee changes the amount on a cheque to more than you owe.
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These steps can help your business to avoid cheque fraud.
- Keep them secure - The first thing is to keep all of your cheque books in a secure place. Know where they are at all times and who can use them. If you order a new cheque book and it doesn’t arrive, contact us right away.
- Fill them in completely - Before you sign a cheque, fill in all the details then cross through any spaces after the payee name and amount.
- Write payee names in full - Always write the name of a payee as it appears, like Lloyds Banking Group rather than LBG or Lloyds. Never shorten it.
- Check your statements - Make sure you can match all payments by cheque to entries on your bank statements. Contact us right away if you notice any issues.
- Get the right printer - If you use a laser printer to create your cheques, make sure it’s capable of doing this task.