The retail industry loses $6 billion a year to check fraud, and the problem is expected to increase each year. One-third (1/3) of check fraud stems from closed accounts. Another twenty seven percent (27%) is due to counterfeit checks, twenty four percent (24%) to forgery, twelve percent (12%) to bankruptcy, and five percent (5%) of check fraud is attributed to other reasons.

Business owners in restaurants and hospitality businesses run a higher than average risk of check fraud. Merchants operating in industries where inventory - such as electronics - can easily be resold also run a higher risk of check fraud.

Retailers and business owners face a growing risk of check fraud as banks allow customers to open accounts via telephone and the internet, and computers make it easier for thieves to create phony checks.

Many businesses rely on check guarantee, check verification, and collection services to fight check fraud. But preventing acceptance of fraudulent checks in the first place is the best policy.

Tips to Avoid Check Fraud:

• Establish a check acceptance policy and follow it consistently. Your policy should define acceptable forms of identification, necessary information to accompany checks, and dollar limits for check writing.
   
• Insist on a photo ID. Only accept checks in which the customer name, address and phone number are imprinted on the check and that they match the information on the photo ID. Be sure the written and numerical amounts on the check correspond.
   
• Confirm the ID is current. Check the date of the photo ID. More than 50 percent of forged checks are cashed with an expired driver’s license.
   
• Record the employee’s initials on the check. The employee that processes and accepts the check should always initial the check or write their employee number on it, according to your company policy. This information will be needed if there’s a prosecution.
   
• Look at the type style on the check. The type style should be consistent and aligned. Make sure it looks real. Also consider the “feel” of the check since most check paper has the same weight and texture.
   
• Check the numbers. Ninety percent of bad checks are numbered below 500. However, this is just a caution, since legitimate new bank account checks are below 500 also.

As a business owner, you know that there are many categories of fraud in which you need to be careful. If you are considering an investment in which you have concerns that it may be fraudulent, hire a professional business valuator to examine intricacies of the investment, including its adherence to current tax and business laws.

Mr. Al Golden specializes in evaluating investments to protect businesses against possible frauds. He also provides CFO and Controller Services, forensic accounting, comprehensive business valuation, and forensic accounting. He is a Certified Public Accountant (CPA), Certified Valuation Analyst (CVA), a Diplomat of the American Board of Forensic Accounting (DABFA), Certified in Financial Forensics (CFF), and is a member of the American Institute of Certified Public Accountants, the National Association of Certified Valuation Analysts, and the American College of Forensic Examiners.

A.M. Golden Accountancy Corporation located in Carlsbad California which is in Northern Coastal San Diego County offers a free initial consultation.  The majority of our clients are located in San Diego, Orange, Los Angeles and Riverside Counties; however, we serve clients outside this area as well. To speak with Mr. Golden immediately, please call his direct line by dialing (760) 444-1913.  If you prefer, you may also send an email: al@amgolden.com