When we hear about financial fraud, we often think of fraudsters using technology or social manipulation to commit their crime. However, this month we highlight a type of fraud that has been used literally as long as bank drafts have been around but still is very common in the fraud criminal’s playbook – Check Fraud. The methods used by criminals to commit check fraud are relatively few and simple, although they can bring significant financial harm to their victims. These methods include:
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Producing counterfeit checks drawn on an actual account
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Altering or “washing” stolen checks and changing the payee, amount, etc.
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Creating checks with a fictitious account, and conducting their crime within float or processing time of each involved financial institution
Fraudsters use each of these types of check fraud in many different scenarios, and in combination with each other. Some common schemes are:
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Mystery shopping. Scammers pretend to hire you as a mystery shopper. They tell you that your first assignment is to evaluate a retailer that sells gift cards, money orders, or a wire transfer service like Western Union or MoneyGram. You get a check with instructions to deposit it in a personal bank account and wire some of the money to someone else, but once you do, the money is gone and the so-called “employer” can disappear, too.
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Claiming prizes. A fake sweepstakes sends you notification that you have won a prize and includes a check, which is counterfeit. You are to deposit the check and send the sweepstakes a money order to cover taxes, shipping and handling charges, or processing fees. The criminals have their money, and you are left to deal with the deposited fraudulent funds.
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Overpayments. Selling items online is a very popular and convenient way for divesting unwanted or unneeded items you may have. However, beware; fraudsters troll these sites to find opportunities to commit their crimes. In this method, a fraudster will buy something from you online and “accidentally” send a check for too much, and ask you to refund the balance, usually via a money order or gift cards. The check is counterfeit, the crook has their money and you are left without payment for the sale of your goods.
At Montgomery Bank, not unlike any other bank, we deal with issues like this far too often. No bank is too large or too small not to be aware of and recognize check fraud. Thanks to our well-trained staff, many of these attempts are caught before damage is done by recognizing oddities in presented checks. You can help combat check fraud as well by practicing the following preventive activities.
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Use the right pen: Write checks with black or blue, nonerasable gel ink, which is harder for the criminal to remove.
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Avoid paper checks: Instead, use Montgomery Bank’s online Bill Pay and money transfer services like Zelle®. These options are generally a safer alternative to paper checks.
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Mail securely: If you must mail paper checks, mail them from the post office or a secure USPS collection box—never in your curbside mailbox.
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Track payments: Confirm checks arrive safely. If a check does not arrive to its intended recipient, request a stop payment and report it immediately.
If you suspect you may be the victim of check fraud, please contact your local Montgomery Bank branch or call our Customer Service Center at (800) 455-2275. We will assess the threat and help you work through the issue if it is indeed fraud. In addition, please take the following steps if you suspect fraud.
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Contact your creditors (credit card companies, banks, etc.) to dispute unauthorized charges.
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File a police report.
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Place a fraud alert and credit freeze with credit bureaus: Equifax, Experian, and TransUnion.
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Report identity theft at IdentityTheft.gov.
Until next month…Stay Alert, Stay Vigilant, and Stay Safe!
