Payroll check fraud is becoming increasingly common as some unscrupulous employees find it relatively easy to cash-in on their employers' paper payroll processes. The crime itself is rather simple to do. An employee will typically forge a payroll check at his or her local bank by making a copy of an authentic check. Since banks process hundreds of checks on a daily basis, most of these copied checks make it through the system without notice until the business later discovers and reports the fraud to the bank.
Signs of Payroll Check Fraud
A fake payroll check looks a lot like an authentic one at first glance and can quite easily pass undetected if you don't know what to look for. Fraudulent checks can be presented in many different forms. A few common signs include:
• Not using the same font for the employee's name and address, or not displaying an address for the employee and/or employer
• Not having a check number
• Missing numbers or MICR (Magnetic Ink Character Recognition) coding that does not match the check number
• Having stains or discolorations in key areas, such as the amount or payee
• Not having perforations at the top of the check indicating it was torn from a checkbook or sheet of checks
Rise in Payroll Fraud
Technology has made it easier for forgers to commit payroll check fraud. Copiers and printers can reproduce a check so clearly that it is difficult to spot a copy, even with a trained eye. Since banks and check cashing companies process so many checks every day, they often don't follow through with requesting two forms of identification before cashing the paycheck. Many fraudsters will show up on a Friday or on an evening right before the bank closes so that they can catch rushed tellers who may be less likely to check for identification.
Stop Payroll Check Fraud With Prepaid Payroll Cards
Any organization that uses paper paychecks runs a higher risk of payroll fraud than those that use direct deposit. Unfortunately, many companies run into difficulties with direct deposit for some employees-especially those without a bank account. Businesses that have these types of employees can utilize prepaid payroll cards rather than issuing paper payroll checks. Prepaid payroll cards are reloadable debit cards that allow organizations to easily, securely, and efficiently pay their employees without all of the risks associated with issuing paper paychecks. Prepaid payroll cards virtually eliminate the high risks of payroll fraud carried out by employees.
Employees also benefit from the use of prepaid payroll cards. They no longer have to waste time at the bank or check cashing center, and they don't have the extra expense of check cashing fees. They have instant access to their money, and can use their prepaid payroll card to pay bills, pay for purchases, and withdraw money from ATMs. This can be especially beneficial for employees who don't have a bank account or do not have the credit needed to acquire a credit card.
If your organization is still issuing paper paychecks, consider updating your payroll system with the most advanced, affordable, and easy-to-use technology that drastically reduces the risks of payroll check fraud. Prepaid payroll cards save your business time and money, and provide a far more secure way to compensate employees.