Check fraud costs American companies billions of dollars each year. This results in increased costs with your bank; through increased prices with your vendors. And, if your company becomes a victim, you pay significantly more in terms of the bottom line and your company's reputation with clients and consumers.

It's important to always remember -- check fraud doesn't just happen to the "other guy." Businesses, both large and small, have fallen prey to fraud perpetrators all across the U.S. However, your firm can practice prevention and easily enact safeguards against check fraud.

For many years, banks absorbed most of this expense. However, reforms in the Uniform Commercial Code place this responsibility on check issuers like you who now must practice due diligence and incorporate extreme measures in their check production. Rosetta Technologies understands the check security and cost control challenges your business faces every day. And we know what you can do about them.

The issuance of fraudulent checks poses a real threat to your company's financial security. But your bottom line isn't all that's affected. Your brand, your reputation, your image in the marketplace Ð all are at stake.

The first step in fighting check fraud is to call Rosetta Technologies to discuss your options in controlling costs and security associated with check production. There are many ways in which we can help you strengthen security, increase productivity, minimize check fraud and reduce operating costs while maintaining flexibility for your business.

The ABA attributes the increase in check fraud to the availability of sophisticated, low-cost technology, including laser printers and desktop publishing software programs. Color copiers have also provided a criminal element with the means to mass-produce any type of check in the market.

Check fraud occurs in a number of ways:

Checks are easily copied or otherwise reproduced, the amounts and payee information is changed, and the checks are cashed with phony identification cards or other media.

Gangs are highly involved in this activity and account for major fraud activities in larger metropolitan areas. Sometimes, they make as many as 40 to 50 bogus checks from a single "good check" copy with a valid signature and other corporate data and logo information on it.

Corporate payroll and accounts payable accounts are popular targets.

All types and sizes of companies, companies with remote offices, out of state or within the state, are targets. In other words, everyone!

Large banks are particularly hard hit, but fraud occurs in every size and type of business and in every size of bank.

While there's no guaranteed method of protecting your company against check fraud, Rosetta Technologies has a solution - our MICR laser check printing technology plus software incorporating a high level of security. We also recommend that you:

General Safeguards

• Contact your bank and ask for a written copy of their suggested procedures they expect you to follow regarding check fraud prevention, check stock considerations and check reconciliation.
• Ask your bank for the written procedures, the "ordinary care" activities, which they implement to reduce check fraud.
• Ask your bank if they have a "Positive Pay" program. Ask for the details of the program and the processing cost, if any. Some banks do not charge for "Positive Pay."

Internal Measures

Also consider the following internal procedures for implementation within your company:

• Review your bank statements regularly; ensure that the authorized signers are not the same people who reconcile the account.
• Review all hiring procedures. Utilize a background check for employees working in vendor assignments, check issuance or check reconciliation areas.
• Ensure that at least two people are responsible for Accounts Payable.
• Ensure that the mailroom personnel and procedures are sound.
• Keep all check stock or cash equivalents in a secure and locked facility. Verity that tops and bottoms of check boxes have not been opened and then resealed.
• Change keys or entry codes periodically to prevent routine access to storage areas.
• Enforce mandatory vacation policies, particularly for those with financial access.
• Conduct surprise audits.
• Read and understand your bank contracts regarding liability, and your company's liability for fraud under the current Uniform Commercial Code (UCC) Regulations.

External Measures

• Consider the following external procedures for implementation within your company.
• Use bank services like "Positive Pay," expedited return information and signature verification systems to protect your Accounts Payable, Payroll and Accounts Receivable areas.
• Purchase blank safety check stock or specially-designed check stock from established vendors or banks that offer this stock for your check printing operations.
• Reconcile your check disbursements and deposits regularly.
• If a payable amount is fraudulently used, close the account as soon as possible.
• Be cautious when using refund accounts such as rebates for subscriptions. This is another target for check fraud, the checks are relatively easy to obtain and use.
• Properly store or dispose of canceled checks and guard new checks. Do not disclose your checking account numbers to individuals you do not know, even if they claim they are from your bank.
• Compare payroll checks with your current employee records.
• Question funds that are transferred between bank accounts; verify new business vendors and the association with your company.
• Review canceled checks and endorsements on a monthly basis.

The current UCC codes outline specific responsibilities for banks and companies to adhere to in handling check fraud cases. Due to the major increase in incidences of check fraud and associated dollar losses, these codes were updated in 1993. Since that time, the UCC has been adopted by all fifty (50) states. In the process, banks have been relieved of sole, 100% responsibility for check fraud; some of the burden of prevention and safeguards has shifted to businesses and corporations.