Cheque Fraud

This is when a cheque is issued without proper authorization and/or without the knowledge of the account holder.
Cheque fraud remains one of the biggest challenges currently confronting businesses and financial institutions.

Types of Cheque Fraud

Cheque fraud can occur in different ways:-
Criminals can steal cheques and, with the help of technology, manipulate legitimate cheques and present them for payment at a store or at a Bank probably using fake personal identification.

This is done in two (2) ways:-
  • Using a computer, scanner, sophisticated desktop publishing software and a high quality laser printer to produce a cheque.
  • OR
  • Using an advanced colour photocopier to replicate a cheque

This refers to the use of strong chemicals and solvents, such as bleach, brake fluid, acetone etc. to modify or completely remove handwriting and other pertinent information from the cheque. When the chemical or solvent is applied to a specific area on that cheque, such as the payee’s name, or the amount it is referred to as spot alteration.
However, when attempts are made to remove all information from the entire surface of the cheque, it is known as cheque-washing.

How to safeguard your cheques

  • Just as you do with cash, keep your cheques in a secure location at all times. Never leave your cheque book in your vehicle or in an open area.
  • Always balance your cheque book by reviewing your account statement, to ensure that the transactions listed correspond with cheques issued. If you see any unfamiliar transactions, contact the Bank immediately to trigger an investigation.
  • Ensure that the Bank has current contact information so that you can be reached quickly to confirm the validity of cheques issued.
  • Never sign a cheque until you are about hand it over to the person who is being paid.
  • Never send a cheque via the mail. However, if this cannot be avoided, make sure to cross the cheque to indicate “Account Payee Only”.
  • If you cancel a cheque, cross out the cheque number and MICR (magnetic ink character recognition) numerical line at the bottom of the cheque which looks like , and then destroy the cheque by either tearing or shredding it.
  • If you close a chequing account, ensure that ALL unused cheques are destroyed.
  • Use alternative payment methods such as cash, credit cards, wire transfers, salary deductions, standing orders, or direct debit.
  • If you notice a cheque(s) missing, or even your entire cheque book, contact the Bank immediately so that the “Stop Payment” procedure can be initiated.

How to recognise bad cheques

  • The edge(s) of the cheque lack perforations.
  • The cheque number is missing.
  • The font used to print the customer’s name varies from that used on the remainder of the cheque.
  • Additional information (such as phone numbers etc.) have been written in by hand.
  • The customer’s address is missing.
  • The Bank’s address is missing.
  • There are stains or discolorations on the cheque which could be the result of erasures or alterations.
  • The MICR line appears shiny.
  • The cheque number does not appear in the MICR line.
  • Numbers/characters appear to be missing from the MICR line.

Additional Tips

  • Ensure that any cheque your write or receive, is properly dated and completed.
  • Do not accept any cheques that appear to have been altered.
  • Do not accept post-dated cheques.
  • Note: A post-dated cheque carries a date in the future; thus delaying payment.
  • Do not accept cheques with no preprinted information such as name, address, etc.
  • Do not leave blank spaces on the payee or amount line.
  • Do not make cheques payable to cash, as it can be easily encashed by anyone if found or stolen.
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