Spotting Forged and Altered Checks
As an MSB, you cash large dollar checks for your customers – $1,000 or more. You want to take acceptable risks and minimize potential losses. It’s prudent then to be aware of the possibility of forged, altered and counterfeit checks.
Be particularly careful with all large dollar checks, checks on relatively new accounts (low check numbers), and for checks of a size that seems unusual or out of character for the type of maker. Using check cashing software with a check reader can also be a good investment – most counterfeit checks do not have MICR encoding.
You are probably also restricting the cashing of checks to known makers with a history where you are actively verifying checks. When calling a maker, DO NOT rely on the phone number shown on the check (which may simply go to a disposable cell phone of an accomplice). Independently verify contact information from a directory prior to calling a maker.
There are a number of characteristics that can help a person to identify potentially counterfeit, forged or altered checks.
- Perforation: Most checks have perforations that you can feel on at least one edge of the check. This is not always true for government checks, checks printed on card stock, counter checks, and temporary checks. Perforation equipment can be expensive so most forgers use a paper cutter which leaves all four sides smooth.
- Federal Reserve District: The first two digits of the ABA or routing transit number for the bank the check is drawn on indicates which of the 12 Federal Reserve Districts the bank is located in. A forger will sometimes change these in order to buy more float time while the check is routed to a distant, incorrect Reserve Bank.
- MICR line: The Magnetic Ink Character Recognition line is printed with a special magnetic ink required for automated check sorting. The ink is very flat and dull. If it shines or reflects light when you tilt the check, it very well could be a forgery. MICR ink is expensive and controlled. Also, most forgers don’t have access to a MICR encoding machine.
- Warning Band: Most original checks now contain a warning band indicating the security features contained on the check. If in doubt, it is good to verify these features of the check but do not rely solely on them.
If in doubt about the authenticity of a check presented for cashing, refuse it or alert/discuss with your manager if that is your store policy. You are under no obligation to cash every check presented to you.