How does cheque fraud occur?

Want to know how you can protect yourself from cheque fraud? Follow our tips and you'll be well on your way.

Cheque fraud takes place when a fraudster uses a stolen or counterfeit cheque to pay for goods and services. More than 90% of fraudulent cheques are stopped before any loss occurs. But even so, cheque fraud still costs millions of pounds a year.

These losses can be compounded when the fraud also involves an 'overpayment'. This occurs when the fraudster – who is often part of an organised gang – targets the seller of a high value item, such as a car, and offers to pay using a stolen or counterfeit cheque made out to more than the price of the goods. Once the cheque clears, the victim is asked to transfer this 'overpayment' to a third party, as well as handing over the item to the fraudster.

When the real cheque owner discovers that money has been stolen from their account, the victim can be obliged to repay the total sum – even if this happens several weeks later.

How to protect yourself against cheque fraud

  • Don't accept cheques from anyone unless you know and trust them, especially when a high-value cheque is involved
  • Be aware that there's a risk that money credited to your account from a cheque could be reclaimed if the cheque turns out to be stolen or counterfeit
  • Always consider other ways of accepting payment for high-value items – a CHAPS payment, or guaranteed, same-day bank transfer, is ideal. Be especially wary if the buyer is unwilling to pay or split the relatively small cost involved with you
  • Keep your chequebook in a safe place
  • Report any missing cheques to your bank immediately
  • Always check your bank statements thoroughly

If you think you've fallen victim to identity theft on your Barclays cards or accounts, contact us.