While many of our personal and business finances are handled electronically these days, check fraud is still a very serious concern for companies in a wide variety of industries. Paychecks can get stolen out of mailboxes, checkbooks can go missing, and signatures and stamps can be forged to cash a check intended for you. All of these examples can be devastating for businesses, and just one small error can lead to a lot of loss,
In this article, we will describe how endorsement stamps should look and ways to prevent fraudulent endorsements on checks.
Business check forgeries often take place when criminals steal checks, endorse them, and present them at a retail location to purchase something. This can also happen at a bank teller window when a criminal uses a fake ID to endorse a check. However, it is also important to ensure that checks are endorsed by the appropriate financial institution and have the key security features that prevent alteration, theft, and counterfeit.
The advantage of having a pre-inked endorsement stamp is that you can record pertinent deposit information without having to write it by hand. Not only does this save you time and effort, but it can also allow multiple employees of a company to handle depositing tasks.
Here is the information that is typically printed on an endorsement stamp:
PAY TO THE ORDER OF:
YOUR BANK NAME
YOUR BANK NUMBER
FOR DEPOSIT ONLY
YOUR COMPANY NAME
YOUR BANK ACCOUNT NUMBER
“For Deposit Only” are three very important words to have here. The ink for endorsement stamps is often red, but sometimes companies use black or blue as well. All of the information must fit within the lined area on the back of the check, and a proper endorsement can help protect you against theft or loss before it is deposited.
One of the best ways that companies can prevent check fraud is by using tamper-evident cash-in-transit bags with detailed labels to document chain of custody. By placing business checks into specialized and well-labeled bags, you reduce the risk of human error and make it harder for criminals to tamper with the contents.
Also, make sure to never endorse a check in advance until you are ready to deposit or cash it. Rather than dropping important checks into miscellaneous mailboxes to send out, consider taking your checks to be mailed directly to the post office for safe delivery.
Fortunately, legal safeguards are in place to protect businesses in America from fraudulent endorsements and check fraud. When it is proven that a check has been endorsed, deposited, or cashed fraudulently, most U.S. banks will reimburse the account holder and refund the money stolen. However, the circumstances of the fraudulent activity may be investigated to determine if reimbursement is truly warranted.
This is why it is so important to keep tabs on your finances and bank statements at all times. If the bank’s investigators find that your endorsement and check handling policies were inadequate, you could be found at least partially liable for the forgery. For example, in the court case Continental Casualty Company v. Fifth Third Bank, the court found that even though Fifth Third did not follow its own endorsement policies, the bank’s customer was actually found to be liable for losses sustained and not just the bank.Back to Blog