Cheque fraud in COVID-19
By ATB Financial 9 June 2020 2 min read
With an increase in popularity of digital payments, the use of cheque as a payment instrument has drastically declined. However, in 2019, Canadian Bankers Association reported that financial institutions in Canada are still processing nearly one billion cheque items per year. Because of the manual processes involved in negotiating a cheque, and the time it takes to do so, cheque fraud is still the number one type of payment fraud experienced by Canadians today.
With the COVID-19 crisis, the Canadian Anti-Fraud Centre has reported an increase in all fraud categories. As of May 2020, 1,005 Canadians have reported fraud related to COVID-19 with a loss of nearly $2 million since March 2020. Suffice to say, now is the right time to educate yourself and your employees on how to protect your business from fraud.
What is cheque fraud?
There are several ways that cheque fraud can take place, including theft of cheque items, creating a fraudulent cheque (counterfeit item), or changing details on an existing and legitimate cheque item (material alteration). Whatever the situation may be, there are several steps that can be taken to protect yourself and your business from becoming a victim of cheque fraud.
How to protect yourself and your business from cheque fraud:
- Keep your cheques, deposit books, bank statements and any other documents with account details in a secured location. Ensure that there is no third party access to your cheques or cheque templates. Cheque templates can be used to further produce counterfeit items that look very similar to your legitimate cheques.
- Always report any missing cheques to your financial institution immediately.
- Ensure that the cheque is properly and completely filled out, including payee name, date and amount. Use dark ink so that your writing is clear and fraud actors are unable to change or erase your writing.
- Review your bank account and transactions regularly. Ideally, you should be reviewing and reconciling your transactions on a daily basis. Different types of cheque fraud have different time frames allowed to dispute a transaction. As such, it’s imperative that you identify and notify your financial institution of any unauthorised transactions to allow a higher probability of recovering lost funds.
- Instead of using cheques for payment, opt for more protected electronic methods such as e-transfers.
What to do if you’re a victim of cheque fraud:
- Contact your financial institution immediately.
- Ensure that you’re reconciling and reviewing your bank account transactions on a daily basis. Use online banking to retrieve the most up-to-date transaction information.
- Consider using more secure and digital methods of payment such as wire transfers, direct deposits, pre-authorized payments, etc.
- If you think someone has unauthorised access to your cheques, close the account and open a new one. This will ensure that your account number is not compromised, and that there’s no threat of someone creating a counterfeit item using your account details and cheque template.
- If you close your account, ensure you shred any remaining cheques so that they’re not floating around long after the account has been terminated.
- Contact your local law enforcement and file a report. You may also want to consider contacting the Canadian Anti-Fraud Centre.
- Educate your employees on payment fraud, and fraud in general.
If you have any questions or concerns regarding fraud or notice any suspicious activity on your bank statements, your financial institution can help. Our cyber security toolkit is also a great resource, stocked full of helpful insights and tips that are easy to integrate into your risk planning strategies.