Check Fraud Tips

Consumers’ funds are protected against fraud
•     If you are a victim of check fraud (the unauthorized use of your account), the bank will make sure you don’t lose a  single penny.

•     Banks typically provide provisional credit to the customer while an investigation takes place.

•     Even though customers’ funds are protected, they should still take precautions (see consumer tips below). Like being rear-ended in a car accident, it may not be your fault, you may not have to pay for the repair, but it is important to take the steps to ensure your car and safety are not in jeopardy – the same with check fraud.

Bank systems prevent the majority of check fraud attempts.
•     Bank prevention systems caught 92 percent or $10.1 billion of check fraud attempts in 2010, according to ABA’s Deposit Account Fraud Survey Report (2011).

•     Attempted check fraud at U.S. banks totaled $11.0 billion in 2010. Actual bank losses totaled $893 million in 2010, down from $1.0 billion in 2008. The number of fraud cases decreased from 761,000 in 2008 to 626,000 in 2010.

•     Employee training is still one of the most effective security measures. Other prevention systems include signature verification, screening of new accounts, “positive pay” systems (a computerized check number matching program between banks and corporate customers), special check stock (water marks, micro-printing and/or holograms) and “touch signature” fingerprint programs for cashing non-customers’ checks.

Beware of fake “check and wire” scams
•     The cashier’s check or “advance fee” fraud became more prevalent with the advent of online auction sites and classified ads.

•     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, he or she deposits it, and then wires 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.

• 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.


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