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Check Fraud

Bankers fight to stay ahead of check fraud artists:

Since the explosion of desktop publishing, color copiers and computer scanners, counterfeit checks have become harder to detect.

Since 1997, the number of fraud attempts against bank accounts has doubled every two years.

Banks process more than 36 billion checks each year—that’s about 109 million checks each day, according to a 2004 Federal Reserve payments study.

 

The Cashier’s Check Scam:

A new fraud, the cashier's check or "advance fee" fraud, has become more prevalent as online auction sites and classified ads have gained popularity.

 

Here’s how it works: A fraudulent buyer offers to send a cashier's check or money order for an amount much larger than the value of the auctioned item and asks that the seller wire back the difference. Once the seller receives the cashier's check, they deposit it, and wire the leftover sum to the buyer. As many as 10 days later, the bank may determine that the cashier's check was fraudulent. Unfortunately, by then the seller has lost their money and merchandise to a scam.

 

Beware of fake check scams:

  • No legitimate company will offer to pay by arranging to send a check and asking the seller to wire some of the money back. If that's the pitch, it's a scam.
  • If a stranger wants to send you payment for something, insist on a check for the exact amount, preferably from a local bank or one with a branch in your area.
  • Under federal law, banks must make deposited funds available quickly – usually within one to five days. But just because you can withdraw the money doesn’t mean that the check is good, even if it’s a cashier’s check or money order. Forgeries can take weeks to be discovered. Be sure to ask if the check has cleared, not merely if the funds are available.
  • Consumers and businesses are responsible for the checks they deposit. That’s because they are in the best position to determine how risky the transaction is – they’re the ones dealing directly with the person writing the check.

 

Other Consumer Tips:

  • Don’t give your checking account number to anyone unless it's a call you have initiated.
  • Reveal checking account information only to businesses you know to be reputable.
  • Guard your checkbook. Report lost or stolen checks immediately.
  • Read your monthly checking statement and check for fraudulent usage.
  • Properly store or dispose of canceled checks.
  • Report any inquiries or suspicious behavior to your banker, who will take measures to protect your account and to notify authorities.