Don’t be a victim: Watch out for Payroll check fraud

Hey there! Let’s talk about payroll check fraud, a big problem that has been on the rise and can cause a lot of damage to a company’s finances and reputation. In recent months, we have had a dramatic increase of reports where payroll checks have been cashed two or three times before the company is notified this is occurring. This can happen when an employee digitally deposits a check using their banking app, or when a company fails to destroy initial versions of checks that have been reissued. Most commonly, this occurs when an employee digitally deposits a check and then goes to a check cashing business immediately after and pull the funds for a second time. In these instances, it can take days for a company to be notified by the check cashing company that the check cashed was invalid.

In today’s fast-paced digital world, remote deposit capture (RDC) technology has become an indispensable tool for individuals and businesses alike. This innovative banking service allows users to deposit checks via their smartphones, tablets, or desktop scanners without physically going to a bank branch. While the convenience and efficiency of remote deposit have revolutionized the banking industry, it also brings about new challenges related to security and fraud prevention. One crucial step in mitigating these risks is destroying checks once they have been remotely deposited.

You may be asking yourself, what can I do about this as a business? Customarily, once employees have checks in-hand, what they do with them is out of your hands. However, you can make an effort to increase awareness about this uptick in check fraud to your employees and those who handle payroll and accounts payable checks.

1. Encourage your employees to shred or destroy checks after they deposit them digitally. They wouldn’t want to risk someone finding the check in the trash and trying to cash it a second time.
2. Build processes around check-printing. Set up clear policies and procedures for payroll and expense reporting, conduct regular audits of records, and provide training for employees and managers about fraud. Make sure the initial checks that are voided and reissued are destroyed properly.

Strong Internal Processes Can Save You Thousands

Properly destroying AP and Payroll checks after they have been digitally deposited can also greatly reduce identity theft and corporate fraud. Checks contain sensitive information such as the Company’s name, address, bank account number, and routing number. When checks are not properly disposed of, they can fall into the wrong hands, giving criminals easy access to this personal and financial information. By shredding or otherwise securely destroying deposited checks, individuals and businesses can significantly reduce the risk of their data being used for nefarious purposes.

Another essential reason for destroying checks after remote deposit is to avoid the possibility of duplicate deposits. Although most banks have implemented stringent security measures to identify and prevent duplicate deposits, mistakes can still happen. Accidentally depositing the same check twice can lead to confusion and additional fees, as the bank may charge for returned or rejected items. By destroying the check promptly after confirmation of a successful deposit, users can eliminate the risk of inadvertently submitting the same check again.

Streamline your Recordkeeping

Proper record keeping is vital for financial management, and destroying checks after remote deposit can help streamline this process. When checks are retained after deposit, they can create clutter and make it difficult to maintain organized records. By disposing of the checks, individuals and businesses can keep their financial paperwork lean and efficient. Electronic records of the deposit, including images of the check, can be easily stored, accessed, and managed, making them a more practical solution for long-term record keeping.

The importance of destroying checks after they have been remotely deposited cannot be overstated. By taking this simple yet essential step, individuals and businesses can protect themselves from fraud and identity theft, avoid duplicate deposits, streamline their record keeping, and comply with their bank’s policies. Embracing this best practice is crucial to harnessing the full benefits of digital deposit technology while safeguarding one’s financial security.