According to PWC’s 2022 Global Economic Crime and Fraud Survey, 46% of companies experienced fraud in 2021 and 2022. To put that in perspective, that’s about a $42 billion loss due to fraud.
Fraudsters continually become more advanced as technology evolves, finding new loopholes to steal financial data. Many businesses are turning toward biometric technology and other security features to help safeguard financial assets, but there is one financial document that’s easily overlooked when assessing fraud risks: the check.
Without careful vigilance, financial institutions and businesses face significant vulnerability to check fraud.
For example, many financial institutions don’t become aware that a check was forged until weeks after it was deposited. By that time the individual has received the funds and closed the account. When the business realizes what has happened, it’s too late to go back — and this financial loss affects their bottom line.
You may be thinking, who still uses checks as a form of payment? The answer is nearly every company. The 2022 AFP Electronic Payments Survey found that 33% of B2B payments in the U.S. and Canada were made by check. In addition, 30% of organizations in the U.S. and Canada received payments from their customers via check.
There are several different ways to issue checks as a business, but by using a traditional checkbook, pre-printed checks, or non-secure MICR check printer, companies are at risk for check fraud, check rejects, and check reject fees.
Traditional Checkbook or Pre-printed Check Stock:
One of the biggest risks associated with traditional checkbooks is the risk of them being stolen. Checkbooks should be stored in a secure location while not in use to prevent internal and external fraud. A company using checkbooks should have a comprehensive audit process in place, to ensure all checks are accounted for. A process should also be in place for a single signer with authority over the account.
Some businesses choose to use a regular laser printer to print payroll checks or other check types using pre-printed check stock. This can be a cheap check printing alternative in the short term, but your business may run into fraud issues if the processes listed above are overlooked. In addition, using standard toner to print the payee and dollar amount on a check can expose your business to check whitewashing. This is when a thief uses acetone (nail polish remover) to easily wash away standard laser toner from the check, allowing them to change the payee and dollar amount.
Non-secure MICR printers:
This is when a company uses a standard off-the-shelf laser printer and a remanufactured MICR toner cartridge. A remanufactured MICR toner cartridge begins as a non-MICR, standard toner cartridge, which is emptied, disassembled, cleaned, reassembled, and refilled with MICR toner. This toner is not held to the same quality standards as originally manufactured toner, this can lead to printer damage, as well as poor readability and bank reject fees.
With a vanilla non-secure printer, companies often switch between a regular laser toner cartridge for general office printing and a MICR toner cartridge for check printing. When someone forgets to switch from the regular laser toner to the MICR toner before printing the checks, the checks are printed with regular laser toner, creating an expensive problem for the company. Since MICR toner is a federal requirement for negotiable documents, the bank will likely reject the checks as non-MICR documents, and the issuing company can incur check reject fees.
Vanilla off-the-shelf laser printers lack embedded security features that are needed to securely print checks. This includes secure numeric fonts, print stream encryption, microprinted lines, audit trails, MICRpoint, and other security features.
Secure MICR printer solution:
Secure MICR printers use a special OEM MICR toner to print the MICR line at the bottom of checks. This line consists of the check number, account number, and bank routing number. The most secure way to issue a check payment is with a MICR check printing solution for business, such as Source Technologies’ MICR printer. Only a secure MICR printer utilizes advanced embedded security features to protect businesses from internal and external fraud.
To learn more about the features of a secure MICR check printer check out our blog “MICR Printer Security Features: Safeguarding Your Financial Documents”
At Source Technologies, we provide our customers with MICR solutions that adhere to the document preparation standards that govern the quality of the printed check document for accuracy in the reading and sorting clearance process. Our blog “MICR Check Printing and Compliance” details all the MICR printing standards our secure MICR check printers meet.
Still not sure if MICR technology is right for your business? Connect with our team to get a virtual overview of our MICR printing solutions to see our products in action.
