Beware the draft

No, I'm not talking about being conscripted into the military for active duty, I'm referring to a form of demand payment similar to cashing a check.  Recently, a client of mine was victim of a scam that pretty much goes unnoticed until a check of the bank balance is made.  Supposedly, the perpetrator "tests the waters" by creating a phony document, usually of little value having somehow illicitly collected bank information on their target.  In this case, the bank statement was received and as usual, the CFO verified all checks that had cleared the bank (they show up as images both front and back on the bank statement) and noticed what looked like a check as it had the payee name, bank routing number and account number.  But something just didn't look quite right as the sequence and the font were not the same as the others.  Now the client company policy requires a signature on all checks so there was definitely something very wrong.  Naturally, the bank was contacted and inquiries were made.  Turns out this strange check was a DRAFT.  A draft functions much like a check but does not necessarily need a signature to be presented for payment.  The person negotiating the draft need only claim that there was authorization for payment (which in this case there was not).  The unsupecting victim (my client) ends up having their account charged for this type of fraud.  A further query to this bank showed that there is really no way to prevent this kind of thing from happening again unless the company is willing to take a more active role in being proactive.  There are many variations of this type of criminal activity, but the best way to stop it is to be vigilant and check your bank activity regularly and be dilligent in doing bank reconciliations monthly.