The United States is experiencing an epidemic of so-called white-collar crime—and check fraud is one of its major symptoms. More than a million worthless checks are written every day. Losses for check fraud alone exceed $16 billion a year, affecting businesses of all sizes.

While the business of counterfeiting checks is certainly not new, the resources and technology available to do it are. Sophisticated desktop publishing equipment makes counterfeiting easier and more accessible. A personal computer with special fonts can easily produce high-quality checks. Add a scanner and a high-resolution laser printer or color copier, and a forger is in business. In addition to having these new and improved resources to reproduce blank checks, counterfeiters also have increased access to original check stock to complement their new technology.

But check fraud does not stop with counterfeiting. Documents, including checks customers have put in envelopes and mailed to creditors, can be intercepted and altered with chemicals that dissolve the original ink. One chemical even dissolves the check itself over a period of days, thus destroying all evidence of the fraud.

The probability of a business being a victim of check fraud continues to increase, as does their potential for liability. Changes to the Uniform Commercial Code require businesses to take steps to prevent fraud. Businesses face increased liability when they are in the best position to prevent the loss but fail to take action.

What can you do?

Advances in technology used to alter checks or produce bogus ones can be mitigated with a few good business practices and some new bank technology. Here are steps that will help you minimize the risk of check fraud:

Examine and reconcile your bank statement immediately after it arrives. If your statement has not arrived within one or two days of normal delivery, call your bank immediately.

Report losses promptly. Tell your bank of any unauthorized payment involving forged documents as soon as you find out about them.

Maintain tight security over your checks. Store company checks safely and securely, with access restricted to those responsible for writing checks.

To strengthen security, change combination locks annually and lock up signature equipment, invoices and critical account information as well.

Examine new checks when they arrive, inventory your supply quarterly, keep check boxes sealed until needed and look regularly for evidence of tampering. Keep your check reorder form under lock and key and store all canceled checks in a secure environment.

Separate financial responsibilities for checks. Minimize temptation and the potential for embezzlement by having one person or team responsible for custody and preparation of checks and and another for reconciliation of the monthly bank statements—reconcilers should not be signers on accounts.

Take advantage of positive pay programs offered by your bank.

Positive Pay is an automated check-matching service that identifies any check that has not been legitimately or properly issued. The business provides the bank with a file of checks it has issued. Fraudulent checks are identified when the bank compares the in-clearing checks with this file. When a check is identified that does not match the file, it is flagged so the bank can submit it to the business for a “pay” or “no pay” decision.

Consider making payments electronically whenever possible, including the use of direct deposit to pay employees. Electronic payments are more secure than checks and reduce external access to your account numbers.

Use secure check stock. While there are no foolproof checks, highly secure checks with many layers of safety features resist alterations, complicating the criminal’s task. Be sure that your check stock contains both overt safety features (features you can see such as watermarks and warning bands) and covert features such as microprint and multi-chemical sensitivity.

You can fight back by being aware and implementing security procedures. For a free brochure outlining strategies to help you from becoming a victim of counterfeiters, call (425) 258-3478.

Author Tim Mansfield is V.P. and relationship manager with U.S. Bank’s South Puget Sound Business Banking Team.