Paper checks are not a secure payment method. Times have changed!
Checks are physical documents that are easily altered or stolen, making them very attractive to fraudsters. Businesses are especially succeptible because their cash cycle moves at a much greater volume. Criminals engage in "check washing" by changing the payee's name, the amount, or the signature on a paper check. Checks can be intercepted from the mail, and you may not realize there is fraud until it's too late, causing financial losses and increasing the chances of identity theft. We have personally experienced this type of fraud. You think you wrote the check to the county for your real estate taxes for $1,500, but the check clears for $5,000 and is payable to an individual.
Consider what happens when you write a check: You either put it in your mailbox, or take it to the post office. At this point, the check is entirely out of your control and contains your name, address, bank account, and routing numbers. And please understand that if you log into your online bank account to initiate a vendor/bill payment, this only authorizes your bank to mail a paper check for you – it is not an electronic payment.
Electronic payment methods such as wire transfers, ACH payments, or credit card payments are much more secure and efficient than checks because they use encryption and authentication protocols to protect your financial information and prevent fraud. They also allow for faster processing and real-time tracking of payments, reducing the risk of errors or delays.
Check fraud has increased exponentially nationwide and with our clients. Last year, banks issued about 680,000 reports of check fraud, nearly double what they reported in 2021. One expert predicted total check fraud would hit $24 billion in losses this year, roughly twice what it was just five years ago.
We are in the process of moving to only accept electronic payments, because we feel so strongly about protecting our clients. Businesses should not be writing paper checks any longer.
