MSB Blog

In an age of digital transformation, it’s easy to assume that paper checks are a thing of the past. However, for many businesses—especially those in B2B transactions—checks remain a common method of payment. Unfortunately, this continued reliance has made check fraud a persistent and costly threat. Solutions offered at Monson Savings Bank such as Positive Pay can help mitigate this risk.

What Is Check Fraud?

Check fraud involves the illegal use or manipulation of checks to unlawfully acquire funds. It can take many forms, including:

• Stolen Checks: Criminals intercept checks in the mail and alter or forge them.
• Check Washing: Chemicals are used to erase ink from a legitimate check, allowing fraudsters to rewrite it.
• Counterfeit Checks: Fake checks are created using stolen account information.
• Duplicate Deposits: A single check is deposited multiple times using mobile or remote deposit tools.
• Insider Fraud: Employees with access to checks or account details may commit fraud internally.

Why Businesses Are at Risk

Businesses are often targeted because they issue high-value checks and may have less stringent controls than financial institutions. Common vulnerabilities include:

• Mailing checks without tracking or security
• Lack of dual controls or approval processes
• Infrequent account monitoring
• Reuse of check stock or predictable check numbers

Consequences of Check Fraud

• Financial Loss: Funds may be withdrawn before fraud is detected, and recovery can be difficult.
• Operational Disruption: Investigations and account freezes can delay payroll, vendor payments, and other critical functions.
• Reputational Damage: Clients and partners may question your financial security practices.
• Legal and Compliance Issues: Mishandling fraud incidents can lead to regulatory scrutiny or liability.

How to Protect Your Business

1. Use Positive Pay: A service offered that matches checks presented for payment against a list of issued checks. Learn about Check Positive Pay and ACH Positive Pay and how it can help you detect fraud.
2. Secure Your Mail: Use locked mailboxes and avoid mailing checks when possible.
3. Switch to Digital Payments: Electronic transfers are generally more secure and easier to track.
4. Implement Dual Controls: Require two people to approve and issue checks.
5. Train Employees: Educate staff on how to spot suspicious activity and report it promptly.
6. Monitor Accounts Daily: Early detection is key to minimizing losses.

Check fraud may seem like an old-school crime, but it continues to evolve and adapt. Businesses that rely on checks must stay vigilant and proactive. By implementing strong internal controls and working closely with your financial institution, you can significantly reduce your risk and protect your bottom line.

Monson Savings Bank Is Here to Help

At Monson Savings Bank, we’re here to help you stay one step ahead. We offer secure digital banking tools, fraud detection services, and personalized support to help protect your business. If you ever suspect fraud or need guidance, reach out to your business banking team.

Visit our Business Security Center for more information on how to protect your business.

This blog post is for informational purposes only and does not constitute legal, financial, or cybersecurity advice. Businesses should consult with qualified professionals for guidance specific to their operations and risk profile. Monson Savings Bank is not responsible for any losses resulting from the use of this information.