Protect yourself from Scammers – Part 1 – Check Fraud

This post contains a few examples written from personal experience where I / we were either a victim or very nearly taken advantage of. There are ways to protect yourself but not all are obvious and, without taking the appropriate measures, you may well find yourself in a similar situation. In this series I’ll write about check fraud, credit card fraud, identity theft, international transactions and other methods that dishonest people will attempt to take advantage of you and your business.

Part 1 – Fake checks: Over the past eight years that VoIP Supply has been dominating the online retail marketplace for new and used Voice over IP hardware, we have had several waves of fake checks totaling well into the high six figures and possibly over the seven figure mark. People have created and delivered hundreds/thousands of checks with our account numbers, company name and address to victimized individuals and businesses around the world. Someone sold their Harley Davidson on eBay in exchange for one of these checks, delivered the bike and a few days later found out the check for $10,000 was not legit. Companies have sold goods to people impersonating VoIP Supply, delivered them COD and received a fake check in return. Those are just a couple of examples, there are hundreds more…

How they did it: First things first, they got our checking account number. At VoIP Supply and IP Camera Supply, we have a lot of customers that choose to pay by wire transfer and we generate plenty of quotes with our wire transfer instructions on it. These instructions contain our account number and our bank’s routing number. In addition to that, every check we cut and send to vendors, partners, customers and affiliates (just like your checks) contains the same information. Once you have this information, all you (they) need to do is march on into and office supplies store, buy some blank checks and start printing. It’s that simple and not much of a secret.

How to protect yourself: Here are some ways we’ve done it.

1. Setup a separate checking account for incoming wires. Your bank can setup an account that does not permit checks to be cashed against it and use it in a one-way manner for deposits only. Once your incoming wire arrives, the bank can then transfer the funds to your primary account(s).
2. Talk to your bank about check fraud protection programs they may have. We use a program that requires all checks that we generate to be registered with the bank prior to them being eligible for cashing or deposits. We provide the bank with a list of check numbers, amounts and payees and they will only cash checks that appear on that list. It may be an inconvenience from time to time, but well worth it for both us and for the bank.
3. There are several well known brands in the check printing industry, companies like McBee and Deluxe. If you can, reach out to them and provide your account number if they have a program to register accounts not eligible for printing. They have their own fraud prevention process as well.
4. If and when you see your first check like this or find yourself in this situation, brace yourself, it will likely be just the start. Don’t wait for them to begin piling in, take action right away. Let your bank know what’s going on, call the police and file a report and begin working on steps 1-3 above. If the tally continues to grow, keep the local police involved, they will escalate it to a federal enforcement group once past a certain dollar figure or volume of transactions.

In our case, while this fake check issue continues to present itself from time to time, it has been put in the hands of the Secret Service and several of these people have been tracked down and prosecuted. Because they were fake checks and the bank caught it, we were not out any funds. Nonetheless, individuals and businesses were victimized and they should be protected by your proactive fraud control measures. Be smart, plan ahead.

• Credit card scams – See part 2 – This one cost us a long time ago. We learned the hard way so you don’t have to.
• Identity theft (business and person) – See part 3 – This is a growing threat for individuals and businesses, don’t ignore it, prevent it.
• International – See part 4 – If you service a global customer base as we do, be cautious and don’t be afraid to walk away when it seems to good to be true.
• Internal affairs – See part 5 – Dishonest people are everywhere, protect yourself from being victimized from inside your own walls.