Tips to avoid cheque fraud

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Sometimes criminals will create fraudulent cheques or change the name or amount of a legitimate cheque. This is known as cheque fraud. Though a cheque is a useful instrument for banking, if it falls into the wrong hands, it could cause you inconvenience and loss.

There are a number of simple steps that you can take to protect yourself from cheque fraud, according to itsallaboutmoney.com.

  1. Keep your cheques in a secure location.
  2. Review your monthly bank statement or regularly check your transactions through online or telephone banking.
  3. Keep your contact details registered with the bank regularly updated.
  4. If you see transactions you did not do or get alerts about unusual activity, notify your bank immediately and they will investigate.
  5. You should never sign a cheque leaf until you are about to hand it over to the person who is being paid.
  6. If you have to mail a cheque out or have it sent out, make sure that you cross the cheque or make it an account payee only cheque by drawing two lines at the top left corner of the cheque and writing ‘Account Payee’.
  7. If you cancel a cheque, you should dispose it off properly after crossing out the cheque number and MICR code.
  8. If you close your account, destroy any unused cheques.
  9. Consider using electronic payments such as online payments, wire transfers or direct deposit of payments.
  10. If you receive a cheque that doesn’t look legitimate, ask for a different form of payment.
  11. If you believe that you have lost a cheque, you should inform your bank as soon as possible. They could stop payment on the lost cheque by tracking the cheque number. It is smart to be alert to your chequebook and its contents and any cheques you may receive from someone else.
  12. You should report to your bank immediately if you lose a chequebook or if it is stolen. Your bank will initiate a ‘’Stop Cheque’’ procedure on all the cheques that have been reported as lost. Your bank will then issue you a new one at a small fee or free as the case may be.

There are a number of security features already built into cheques to help prevent fraud. Banks also have the means and will try to detect fraudulent cheques, but it takes time. And it may not always be possible to do so until it goes through the cheque clearing system.

By alerting your bank, you help your bank take steps for damage control and safeguard your account from losses as a result of a lost cheque or stolen cheque. This will also prevent you from being held as negligent or responsible for any loss as a result by the bank.

Cheque fraud is one of the biggest challenges faced by financial institutions. It is among the fastest growing crimes in the financial world.

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