How To Verify Funds
To verify a check, you need to contact the bank that the money is coming from.
Use Legitimate Sources
The check might have the bank’s phone number printed along with the bank’s name and logo, but don’t rely on that phone number for verification. If the check is fake, con artists may have provided a number that goes to a fake “customer service agent,” who will tell you the payment is good. Instead, do your own research to find a legitimate phone number for the bank.
Bank Policies May Pose Challenges
Some banks make check verification difficult or impossible. They may require you to visit a branch in person. Or, they may only verify the account exists, not whether it has any funds, in order to protect their customers’ privacy. From there, you have to decide whether or not to take your chances and deposit the check.
What Do You Know?
After you verify funds, you have more information, but you still can’t be certain that the check is good. At best, you might find out that there are sufficient funds available in the check writer’s account at the time of your phone call (or at least as of that morning). So, what could go wrong?
The check writer can withdraw funds from the account before you deposit the check. You might deposit the check immediately after verifying it, but it can take a day or two for the check to hit the check writer’s account. Even if you deposit the check with your bank’s mobile deposit app, the process might still take a day or two. The person who gave you the check might have given you a stolen check or used stolen checking account details. The legitimate account owner may have sufficient funds, but they can reverse the payment once they see that a fraudulent transaction has hit their account. Other withdrawals, debits, or account holds can deplete funds from the check writer’s account before your check is presented.
How To Prevent Problems
The safest way to make sure you get your money is to cash the check in person at the check writer’s bank. You must visit a branch of the check writer’s bank for this strategy to work. If you take it to your bank, and it happens to be a different bank, your bank might give you cash immediately. However, the funds have not yet been collected from the other bank. If you go to the bank that the funds are drawn on, the money comes out of that account immediately. If you deposit (or cash) the check at your bank, It’s safest to wait several weeks before you spend the money—unless you’re confident that the check is good. You’re responsible for any money you take out of your account, so you’ll have to repay your bank if the check bounces. Your bank’s funds availability policy (and federal law) may allow you to walk away with cash, but that doesn’t mean the check is good.
Check Verification Services
If your business accepts checks from customers regularly, contacting banks for every check is not practical. Automated check verification services can help you figure out if you’re likely to get paid, but they don’t necessarily verify recent account balances. Instead, those services flag accounts and people who have a history of writing bad checks—and that’s useful information. Some services even guarantee payment if they fail to alert you to a bad check.
Red Flags To Look Out For
In addition to asking banks for information, some basic detective work can help you determine if a check is likely to be a fake.
Look for a list of security features, which often appears on the back of the check. Next, verify each of those features. Look for microprint, which suggests that the check was printed by a legitimate check printer (and not at a con artist’s home). Look for behavioral red flags, like somebody asking you to give them cash in exchange for a check. If you accept checks from customers, set up rules to reduce the chances of getting ripped off.
