Help Your Organization Avoid Being Part of a Demand Draft Fraud Scheme
Demand drafts or remotely created checks have become the latest device for fraudsters to illegally obtain funds from your checking account. Demand drafts were designed to aid legitimate telemarketers by allowing a payment to be processed with wording such as “signature not required; your depositor has authorized this payment to the payee”. Due to the electronic nature of checking accounts signatures are rarely verified by banks making fraudulent transfers easier to accomplish. The thief only needs the name of the account holder and the account number to obtain funds from your account.
To protect your entity’s accounts:
- Be careful with your bank account numbers. Do not give account numbers to outside parties unless you are certain it is a legitimate request. Bank account information should be kept in a secured location with limited employee access.
- Do not allow checks to be written on accounts that accept wire transfers.
- Use positive pay, if available. Positive pay allows you to send an ASCII file of legitimate disbursements for the bank to verify before payment of checks.
- Reconcile your bank statements timely.
- Do not automatically deposit every small dollar check, or use different bank accounts for checks and deposits. Fraudsters can obtain the bank information from the back of a check you deposit.
By paying attention to your bank processes you may be able to avoid being a victim of a demand draft fraud scheme.
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or tax related matter.