How to Prevent Check Cashing Fraud

How to Prevent Check Cashing Fraud

July 26, 2017

Check cashing fraud has plagued check cashers since the birth of the alternative financial services industry. Criminal activity is always evolving, so staying on top of financial fraud is a full time job! If you are a check casher, preventing fraud before it starts is your only real protection. To do this, you need to understand the current trends, implement robust compliance systems, communicate with your bank, and employ the latest check cashing technology.

Check Cashing Fraud Trends

As technology advances, so do the techniques used by criminals to outsmart unsuspecting businesses. Every week there is a new check cashing fraud horror story splashed across the front page of the news. Recently, 39 New Yorkers were arrested in one of the largest check cashing schemes to date. The alleged criminals withdrew more than $1 million in fraudulent funds after depositing $2.5 million in bad checks.

They used an elaborate method known as “debit card cracking.” In this scheme, fraudulent checks are deposited into real bank accounts and withdrawn before the bank suspects the funds. The account holder reports their account as compromised, saving themselves from scrutiny. In conjunction with check cashing employees, this large network of alleged thieves defrauded check cashing businesses and banks alike.

This type of illegal activity is all too common, but it can be prevented with smart compliance systems. Beyond elaborate multi-person schemes, criminals are creating fake checks more easily than ever before thanks to advancements in at-home printing capabilities. Understanding the pervasive nature of check cashing fraud is the first step in preventing it. Methods and types of fraudulent checks include: money laundering, phony IRS checks, counterfeit checks, forged checks, paperhanging and check kiting

In every case, the customer will present a check to a check casher. The only issue is that these checks aren’t really what they appear to be. It might be a copy, an entirely fake check, or have some type of illegal alteration. As a check casher, your job is to identify these red flags before you cash the check.

Fighting Check Cashing Fraud with Strong Compliance

The FBI estimates $18.7 billion in losses annually due to check fraud. It is impossible to know the exact number, since fraud by its very nature is difficult to track – and some continues undetected. By training your employees, implementing a check cashing process, and using the latest technology, you can take powerful steps towards preventing check cashing fraud. Check cashing compliance helps your check cashing outlet find a business bank account and reduce costs associated with fraud. The cost of fraud is often so high that your business has to close…

As a result, preventing it is essential for the health of your check cashing business. The second a customer walks into your check cashing outlet, your check cashing compliance protocol should kick into gear. This means thoroughly vetting every new customer. A clear check cashing guide should carefully outline every step in your check cashing process. When your employees adhere to the process, spotting red flags is easier and refusing to cash checks for suspicious customers becomes second nature.

In addition to your stringent check cashing process, you can take steps to secure your business location. To deter criminals, you can take the following steps:

  1. Install security cameras
  2. Remove obstructions around entrances (places to hide)
  3. Keep windows clear so that you can see the cash register from the outside
  4. Follow an opening and closing protocol, always with 2 or more employees
  5. Place a ruler on door frames for suspect height reference
  6. Vary cash delivery and bank run times and routes
  7. Thoroughly vet all employees
  8. Train employees throughout the year

Staying alert, following a system, and taking extra care to secure your location can help you catch most check cashing fraud red flags. You should engage a compliance expert to help you analyze your unique risk based on your location, the services you offer, and current trends. A strong approach to compliance will show check cashing banks that you mean business – and make it easier for you to secure and maintain a real bank account.

Communication & Check Cashing Technology Are Key

Many of the current federal AML regulations are designed to improve and encourage communication between agencies. If you are proactive about transparent and instantaneous communication, you and your banking partner can stay ahead of check cashing fraud. Communication ensures that everyone has the information they need to make strategic decisions, detect patterns, and prevent financial crime.

How can you communicate with your bank while running a check cashing business? NCC equips every client with an advanced POS system with Remote Deposit Capture (RDC). This check cashing technology captures customer data and communicates it seamlessly to your financial institution. As a check casher, you can view a high level picture of your daily, weekly, monthly, or annual transactions – or drill down to the fine details of a single transaction. Managing multiple locations is a breeze and you will never have to worry about “missing something.”

When you communicate clearly and in a timely matter, you are also giving your bank peace of mind. As they manage their own risk, this communication will facilitate a trusting and mutually beneficial relationship. When you can rely on cutting edge technology to communicate for you, it’s a triple win!

If you are looking for a partner to help you prevent check cashing fraud, NCC is the answer. NCC provides a reliable check cashing business bank account for each of their MSB clients. In addition to your bank account, you also gain access to check cashing financial services including: extended deposit times, armored cash logistics, POS technology, and wire transfer capabilities. NCC’s team of check cashing compliance experts is at your disposal 24/7 to answer questions and keep your business up and running. As regulations change, new threats emerge, and your business matures, NCC is there every step of the way to keep you ahead of the curve.

Ready to discuss your check cashing bank account and supported check cashing services? Fill out the “Open an Account Today” form on our website or call the number at the top of the page!

Get The MSB Insider

Want The MSB Insider sent to your Inbox?

Other Articles

Available 24/7

Our first priority is to keep our customers banked and processing items. Our partnership with multiple MSB-friendly Financial Institutions allows us to meet that goal. If you have questions about establishing a new MSB bank account relationship, or would like help with your current account, please feel free to either e-mail or call us. 24 hours a day. 7 days a week

The MSB Insider

California Check Cashers Now Have Banking Options With NCC's Expanded Services

Check Cashers Can Enjoy Accelerated Rotation of Capital and “Next Day” Funds Availability

LOS ANGELES, July 9, 2019 /PRNewswire/ — National Check and Currency (NCC) expands check cashing services for California money service businesses ...(read full article)

  • *Email:

What is The MSB Insider?

Each month, we take a close look at the MSB industry and provide insider access to events, interview with industry leaders, and so much more. This is a free service and you can unsubscribe at any time.

Copyright © 2008-2021 National Check & Currency. All Rights Reserved

Client Login

Forgot Your Password?

Reset Your Password