Employer Advantage’s comprehensive payroll management includes processes, procedures, and software that provide essential fraud protection for our clients.
By Lee Allphin, Employer Advantage Founder and Chairman of the Board
Imagine receiving a call from your bank informing you that your company’s checking account is overdrawn. You are certain you have the funds to cover all the checks you issued, so how is this possible? A quick trip to the bank confirms the unsettling truth: the money in your account is gone due to a wave of successfully cashed counterfeit payroll checks!
According to industry experts, check fraud is a problem that will cost American businesses and banks an estimated $50 billion this year alone.
The prevalence of technology in our connected society means that it is easier than ever for criminals to create authentic-looking bogus checks. Basic corporate account information can be used to reproduce hundreds of realistic counterfeit or forged checks within a matter of hours. Any bad guy with access to a personal computer, a scanner, and basic software can create doctored corporate checks that even a CFO would have trouble spotting.
Financial institutions are no longer automatically expected to shoulder the burden of check fraud-related losses, which means business owners can end up being held responsible.
Unfortunately, businesses that have yet to experience check fraud often assume the risk of being targeted is too small to necessitate taking preemptive steps. These companies fail to realize, until it’s too late, that a single incidence of check fraud will likely cost them more than the basic fraud prevention measures that would have prevented it.
How Can Businesses Protect Themselves from Payroll Check Fraud?
There’s not much a business can do to convince a criminal not to create counterfeit payroll checks. But there are important steps a business can take to protect itself.
Over the past 30 years, Employer Advantage has developed a system of protection that mitigates risk and helps our clients avoid having fraudulent checks successfully cashed. This includes our clients’ payroll checks being paid through an Employer Advantage account, which means we eliminate the burden of even successful payroll fraud hitting any of our clients’ bank accounts.
Below is an email we recently sent to one of our clients after several attempts to cash counterfeit checks were thwarted:
We wanted to reach out to make you aware of a situation. We have had multiple checks try to clear our bank account in the last few days that appear to be fraudulent payroll checks. It is Employer Advantage’s bank account information that is on the checks, but they have your name and address as the payer. We have the situation under control and our internal controls are working to prevent the checks from clearing. We have also reported them as fraudulent to our bank.
We wanted to make you aware in case authorities try to reach out to you and to heighten your awareness to other potentially fraudulent activity within your organization.”
At a minimum, companies can and should take basic steps to protect against the threat of check fraud:
- Direct Deposit: Fewer checks means lower risk. Get as many employees as possible to sign up for direct deposit. In most states, you can make it a requirement.
- Pay Cards: For those employees without bank accounts, a pay card can be provided into which payroll is deposited electronically each pay period.
- For employees still requiring a paper check, put a strict physical check method in place. Ensure checks are printed away from employees, and that no employees have access to the check printer. No one person should have access to the entire process. Never use pre-printed fill-in-the blank check stock, which would make check fraud one step easier.
Employer Advantage’s approach to check fraud prevention is comprehensive.
We help establish best practices to ensure our clients are protected. For employers that must issue paper checks, we ensure the checks include security features and magnetic toner. Employer Advantage also incorporates Positive Pay Software into our payroll services, which reduces the risk of getting that unexpected call about cashed counterfeit checks. We provide the bank a list of valid checks, which can be compared to incoming checks. Checks that are attempting to clear but are not already known to be valid are flagged for attention and can be rejected and not paid if deemed fraudulent. Should fraudsters evade detection, we shoulder the burden of fraudulent activity by running payroll though our account.
Need protection from payroll check fraud or help with any other employee administration and compliance responsibilities?
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About Employer Advantage
FREEDOM TO SUCCEED – Trusted for more than 30 years, Employer Advantage frees you from the administrative and compliance burdens of having employees so you can focus on your business success. Versatile enough for companies of all sizes, our unique service combines comprehensive management of your employee administration and compliance with the latest software solutions, tailored to meet your individual needs and company culture. Our full-service management of HR, payroll, health and benefits, workplace safety, and more, enhances your profitability while reducing the costs and risks associated with employment law compliance. We provide your employees with top-notch assistance and benefits that help you increase productivity, save time and money, and attract and retain a talented workforce. And for small and mid-sized businesses, we bring you economy of scale with access to Fortune-500-level benefits, specialty assistance, and savings that would not be possible to attain on your own. Headquartered in the Midwest and serving more than 400 companies and 10,000 worksite employees throughout the country, Employer Advantage is an IRS-Certified Professional Employer Organization (PEO) (C-PEO). Experienced, certified, and trusted.