With Fraud at an All-Time High, Secure Checks Help Deter Fraud & Detect Tampering

Posted by Guest Post on December 5, 2013

Deter Fraud and Tampering with custom checks

Guest Post by Michele Wilson, Deluxe Corporation

As a property management company owner, it’s important that you help protect your business from potential fraud. One way to do this is with High Security checks. While standard checks are equipped with basic protection, High Security checks are embedded with additional deterrents for maximum fraud defense.

It takes an average of 18 months to discover fraud has been committed.

Did you know it takes an average of 18 months to discover fraud has been committed? By then, significant damage has been done. In fact, nearly half of organizations victimized don’t recover any of their losses from fraud. Because the average small business loses up to 7% of their annual revenue (over $600 billion nationwide), the pennies per check that High Security features add is a welcome exchange to beef up protection.

While nothing guarantees a non-penetrable defense, the security features of enhanced check stock make fraudulent techniques such as check washing much easier to detect and more difficult to achieve. Since more banks are requiring secure checks as part of their depositor’s agreements, they continue to shift fraud liability to their customers. Take responsibility for your own safety, starting with your check stock.

10 tips from scambusters.org to reduce the risk of HOA Fraud:

  1. Ensure all board members and employees are thoroughly vetted and that the election or hiring process is "transparent" -- that is, not secretive.

  2. Keep a wary eye out for a board member or employee who seems to be living beyond their means or who never takes vacations (because their crime might then be uncovered).

  3. Question any delays in circulating financial statements and other organizational documents.

  4. Segregate responsibilities -- that is, have different people responsible for signing and banking checks and a third person for reconciling the two. Require two signatures on all checks.

  5. Require at least two original copies of bank statements (that is, direct from the bank, not photocopies provided by someone inside the organization).

    Scrutinize statements, looking for individuals or companies with similar names (one may be a legitimate recipient, the other not).

  6. Set up a "positive pay" arrangement with the homeowners' association bank. Under this system, you send your bank a list of checks that have been authorized and they then compare it with the actual checks they have.

  7. Set a limit on invoice amounts that can be paid without full board authorization. Perform regular spot checks on invoices (from just one company but choosing a different company each time).

  8. Download Preventing Fraud: How to Safeguard Your Organization, a free useful PDF guide aimed specifically at nonprofit organizations produced by the former National Center for Nonprofit Boards (now known as BoardSource).
    [Ed. Note: the above link leads to a paid membership site. If you are looking for a free source of similar material, check out this free recorded webinar and slide deck on safeguarding your organization from fraud by the CPA firm Mayer Hoffman McCann P.C.]

  9. Have your accounts independently and professionally audited, preferably every month but at least once a year.

  10. Finally, just in case the worst happens, ensure you have full compensation protection through employee fidelity bonds, and directors and officers insurance (known as "D&O").

 Excerpted from http://www.scambusters.org/hoascams.html