How Forged Checks Work
Common forms of check forgery include:
- Forged drawer signature – when a criminal signs the account holder’s name to issue a fake payment.
- Forged endorsement – when the payee’s signature is faked to deposit or cash a stolen check.
- Blank check forgery – when unused checks are stolen and fraudulently completed.
Fraudsters may use simple handwriting imitation or more sophisticated methods, such as scanning and digitally reproducing a signature, to make forged checks appear authentic.
Why Forged Checks are a Concern
Forged checks are a serious risk because they exploit trust in the banking system and can result in significant financial losses.
For governments and nonprofits, these crimes not only impact cash flow but also undermine public confidence. Because forged signatures can be difficult to distinguish from legitimate ones, detection often requires close monitoring and strong internal controls.
Preventing Forged Checks
Organizations can reduce exposure by:
- Securing physical check stock and limiting access.
- Using positive pay services with banks to flag unauthorized checks.
- Reconciling bank accounts frequently to catch fraudulent activity quickly.
- Transitioning to electronic payment methods to minimize paper check use.
What's important here?
A forged check occurs when a criminal fakes a signature, either the account holder’s or the payee’s, to steal funds. Because forged checks often look legitimate, they pose a significant risk.
Strong oversight, bank fraud protections, and electronic payment adoption help reduce this threat.
