Protecting farmers from check fraud

Checks remain the primary method for financial transactions in agriculture today. That makes check fraud and fake check scams common hazards for farmers and ranchers. But there are ways to protect yourself and your agricultural business from this potentially costly problem.

Check fraud happens when someone alters a check to withdraw or otherwise access money from another account. It can happen multiple ways, including:

• Using counterfeit checks to withdraw from your account
• Stealing and fraudulently writing blank checks
• Altering the amount paid or payee on a legitimate check
• Depositing a counterfeit check digitally with hacked information
• Fraudulently using uncleared checks between two banks to withdraw funds (check floating or check kiting)

“We do a lot of banking digitally today. But checks are still an important part of our farm’s financial management,” said Nationwide Business Program Management Senior Consultant Erin Cumings, who also operates a family crop and livestock farm in Warren County, Iowa. “With so many potential financial hazards out there, it’s important for us to manage checks carefully.”

Tips to protect yourself from check fraud

Always use common sense and verify transactions with your bank before withdrawing or depositing funds via check. Here are a few other tips to prevent check fraud and the financial damage it can cause your ag business:

• Keep checks secure. Make sure that you keep checks in a secure location like a locked cabinet or safe. Avoid carrying multiple checks with you to prevent theft.
• Check bank statements regularly. This allows you to catch any fraudulent activity as soon as possible. Contact your bank if you notice any discrepancies.
• Use checks with security features. Security features like watermarks, holograms or heat-sensitive ink make it more difficult for fraudsters to copy or alter checks.
• Use caution with suspicious financial requests. Be cautious with any unexpected check request, especially for a large amount. This could indicate check fraud.
• Don’t trust emails and phone calls. Scammers often use phishing emails and phone calls to get account information. Never share it unless you know the sender.
• Monitor your credit and balances. Set alerts if your account dips below a specific balance and contact your bank if you notice any unauthorized activity.
• Educate farm employees. Make sure everyone in your ag business knows how to spot potentially fraudulent activity and steps to take if they suspect check fraud.

“We monitor our account activity closely. It’s also important to have a good relationship with your bank, so that if something looks off, you have a partner to help figure it out,” Cumings said. “Even changing the pen that you use to write a check with can help prevent fraud.”

What to do if you’re a victim of check fraud

By taking the following actions, you can limit the damage caused to your business by check fraud and hopefully prevent it from happening again in the future:

• Contact your bank immediately and report the fraudulent activity
• File a police report
• Place a fraud alert on your credit reports
• Change your account numbers and passwords

Also consider investing in fraud insurance. Policies typically have a small amount of coverage that could be increased to cover losses incurred due to fraudulent checks. They can offer some financial security if you fall victim to such a scheme. Insurance doesn’t directly prevent check fraud. But it serves as a safety net and can provide financial reimbursement in the event of fraud.

Talk to your Nationwide Farm Certified agent to learn more about your fraud insurance options and other steps you can take to prevent check fraud in your ag business.