How Can Payment Platforms Protect Your Business from Mail Theft-Related Check Fraud?
Mail Check Fraud Statistics
Mail theft-related check fraud has emerged as a significant threat to businesses and individuals. According to the Treasury’s Financial Crimes Enforcement Network (FinCEN), over 15,400 reports of suspected mail theft-related check fraud were submitted by more than 840 financial institutions between February and August 2023. The financial toll is alarming, with $688 million in losses reported over just six months.
Common schemes include:
- Altered checks (44%)
- Counterfeit checks created using genuine checks as templates (26%)
- Fraudulent signatures (20%)
The median fraud amount exceeded $14,000, with the average reaching $45,000. These statistics underscore the critical need for businesses to adopt proactive strategies to combat this growing threat.
The Consequences of Mail Theft-Related Check Fraud
Falling victim to mail theft-related check fraud can have far-reaching consequences. When fraudsters cash altered or counterfeit checks, businesses face financial losses and operational disruptions. The process of closing compromised accounts and opening new ones can be time-consuming and stressful. Worse, stolen funds may be irretrievable, leaving businesses with monetary setbacks. By addressing these risks proactively, businesses can protect themselves from unnecessary financial and operational strain.
How Payment Platforms Reduce Fraud Risks
Modern payment platforms such as Bill.com, Melio, and Ramp offer secure and efficient alternatives to mailing checks. These platforms enable ACH payments, which are faster, cheaper, and safer than traditional check payments. Even if checks are necessary, these platforms can help mitigate fraud through advanced features:
- Shielding Your Account Information
Payment platforms act as an intermediary. When you issue checks through them, funds are debited from your business’s account and placed in the platform’s secure clearing account. This prevents your account details from being exposed on the checks you issue. - Positive Pay Systems
These platforms submit check listings to your bank, including vendor names, amounts, and check numbers. The bank clears only those checks matching the provided details. If discrepancies arise, such as unlisted or altered checks, the bank flags them for review before cashing. - Approval Workflows
Payment platforms allow businesses to set up multi-step approval processes, ensuring that no single employee can unilaterally execute a payment. This oversight mitigates the risk of internal fraud. - Audit Trails
Detailed transaction records provided by these platforms simplify fraud detection, support internal audits, and expedite fraud resolution.
By using these types of platforms, businesses can significantly reduce their exposure to mail theft-related check fraud while streamlining payment processes.
Additional Measures to Reduce Check Fraud Risk
For businesses that continue to issue checks from their own operating account, consider adopting the below practices to reduce risks:
- Secure Mail Handling: Use locking mailboxes or rent secure post office boxes for both incoming and outgoing mail.
- Frequent Mail Checks: Retrieve mail promptly to minimize the time it remains vulnerable.
- Direct Postal Drop-Off: Deliver outgoing checks directly to postal clerks instead of using outdoor mailboxes.
- Regular Account Monitoring: Review bank statements frequently to identify unauthorized transactions early.
- Positive Pay Systems: Work with your bank to implement Positive Pay for flagging discrepancies in check payments.
- Minimize Check Usage: Opt for ACH payments or wires whenever possible to avoid the inherent risks of physical checks.
Enhance Fraud Prevention with Expert Accounting Solutions
Outsourced accounting services, such as those provided by Blackledge Financial Services, can help businesses safeguard against mail theft-related check fraud. By implementing payment platforms, monitoring transactions, reconciling bank accounts, and deploying risk mitigation measures like Positive Pay, we ensure your financial operations remain efficient and secure. Let us help you protect your business, mitigate risks, and maintain seamless operations. Contact us today to learn more about our tailored accounting and bookkeeping solutions.