Checks are indispensable to aspiring entrepreneurs and established businessmen alike. Suppliers and lessors usually require post-dated checks or PDC’s to cover installment payments, and issuing checks are generally more convenient and safer than carrying huge amounts of cash. Here are some basic tips to avoid being a victim of check fraud:
1. Gauge the credibility of the issuer/maker. You cannot simply rely on the Bouncing Checks Law or BP 22, which now appears to be a toothless law. Follow your gut-feel and decide if the issuer/maker has more to lose when he runs from his obligation.
2. Include a secret mark/sign (like a harmless dot in a particular location) in all your checks. This may not be fool-proof, but it helps. Remeber that going to the PNP Crime Lab for authentication is a time-comsuming and costly process.
3. Always reconcile your record at the end of each month. Banks send statements; if they do not, ask them. Many fraudulent activities can be prevented or minimized by this simple bookkeeping.
4. A check is different from Negotiable Orders of Withdrawal (NOW). They look the same, but a NOW document indicates that it is a NOW account. These are not checks.
5. As a rule, don’t accept a second-endorsement check. Mr. A issues a check to pay Mr. B (payee), and Mr. B uses the same check to pay Mr. C. That is a second-endorsement check. It’s so risky that banks, as a rule, do not accept these checks.
6. Be careful with crossed checks. Crossed checks have diagonal lines in one corner, usually at the top-left portion. It’s good only for the one named as the payee and it can only be deposited by the designated payee with a bank where he has an account.
7. Always be vigilant. Simply because your check was falsified/forged does not mean that you’re free from liability. If banks are able to show that the accountholder was negligent, the accountholder may shoulder a portion, if not all, of the loss.
It’s painfully obvious that frauds involving checks are still prevalent. In many instances, even if the transaction is valid, the check you are holding is worthless. Handling of checks, just like in other aspects of business, requires vigilance.
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August 21st, 2008 at 6:31 pm
what is DAUD in connection with BP 22?
March 18th, 2009 at 1:36 am
Question: How many years can I still sue the issuer of a bouncing check after it bounced? It bounced in 2003 but I haven’t sue her in court. Please advice. Thanks.
August 15th, 2009 at 6:43 am
You can sue the issuer of a bouncing check up to 4 years from the date of the check.
August 22nd, 2009 at 4:14 am
James, DAUD means “Drawn Against Insufficient Funds”.
January 6th, 2010 at 1:22 am
What’s the probability of winning a case against a person who issued a bounced check. This person is in u.s already, not sure if she’s coming back. Have sent her notice of dishonored check already.
April 4th, 2010 at 10:24 am
the amount for the checks i issued is 15,180 in total but i left the checks blank and pay to cash can i be sued for BP22?
August 23rd, 2010 at 5:24 pm
[...] also known as the Bouncing Checks Law. While it’s important to observe certain reminders to prevent check fraud, here are some things a layman should [...]
August 24th, 2010 at 6:58 pm
[...] number of discussions regarding checks (see Bouncing Checks (BP 22): Matters a Layman Should Know; Basic Reminders to Prevent Check Fraud; and No imprisonment in BP 22 or Bouncing Checks cases?). This time let’s have a more [...]
September 15th, 2010 at 8:15 pm
[...] number of discussions regarding checks (see Bouncing Checks (BP 22): Matters a Layman Should Know; Basic Reminders to Prevent Check Fraud; and No imprisonment in BP 22 or Bouncing Checks cases?). This time let’s have a more [...]