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Forgery and Fraud II

 



CONSUMER ALERT!



How to Avoid Check Fraud


Business owners face a growing risk of check fraud, as computers make it easier to create phony checks, and banks allow customers to open accounts via telephone and the Internet.


The retail industry alone loses $12 billion a year to bad checks, with industry estimates attributing half those losses to check fraud. Some industry analysts see the problem of bad checks growing as much as 25 percent annually in the years ahead.


Many businesses rely on check guarantee, check verification, and collection services to fight check fraud. But preventing acceptance of fraudulent checks in the first place is the best policy. According to a recent Ernst & Young survey, 75 percent of merchants used a third-party verification service to preapprove checks, 16 percent used manual approval methods, and 13 percent used in-house authorization systems.


Here are some other steps to combat check fraud:

• Establish a check acceptance policy. Be sure to follow it consistently. Your policy should define acceptable forms of identification, necessary information to accompany checks, and dollar limits for check writing. Be careful: laws in several states prohibit check acceptance policies that require a credit card number on the check.

• Get ID. Cashiers accepting checks should be certain the customer name, address, and phone number are imprinted on the check and that they match the information on the ID. Be sure the written and numerical amounts on the check correspond. If a bank agrees to process a check with differing amounts, the written amount overrides the numerical figure.

• Confirm that the customer's identification is current. More than 50 percent of forged checks are cashed with an expired driver's license.

• Record the cashier's ID number or initials on the check. This information will be needed if there's a prosecution.

• Feel the check. Merchants should also consider the "feel" of the check since most check paper has the same weight and texture. Except for those checks issued by the government, commercial checks should have a perforated edge. The type style should also be consistent and aligned.

• Check the numbers. Ninety percent of bad checks are numbered below 500. But keep in mind that there's little to stop a customer from opening a checking account and starting checks with a higher number.

• Don't accept second- or third-party checks. Only about one percent of the 60 billion checks written each year actually bounce. One-third of check fraud stems from closed accounts and "check kiting," according to the Nilson Report, a news service for the payment services industry. Another 27 percent is due to counterfeit checks, 24 percent to forgery, and 12 percent to bankruptcy, and 5 percent of check fraud is attributed to other reasons.

Business owners in restaurants and hospitality businesses run a higher than average risk of check fraud.


Merchants operating in industries where stolen goods — such as electronics — can easily be resold also run a higher risk of check fraud.


Collecting on bad checks can be difficult, if not impossible. Nationally, less than one-third of checks returned for insufficient funds are ever paid in full. But collection efforts are far more successful if the merchant acts quickly to seek payment.


Is this check for real?


Fake check scams defraud thousands each year and consumers lose an average of $5,000. Con artists are looking to gain your trust, so they are friendly and very convincing.

Learn how the scam works and what your responsibilities are when you deposit a check into a bank account.


Sample Fake Check Scams:



• The con artist claims to be from another country and says it's too hard to make payment directly, so they have someone who "owes them money" mail the victim a check. The amount of the check is more than owed, so the victim is instructed to deposit the check and wire the excess back. The check is later found to be fake and the victim is out the money they wired back to the con artist. Remember, there is no legitimate reason for someone to ask you to wire money back.

• You've won a lottery and receive a cashier's check or money order. You're asked to return some of the money to pay for taxes, legal fees or other expenses. You deposit the check into your account and it appears legitimate so you mail them a check to pay for "taxes." A few days later, the bank calls and says the check you deposited was fake and you need to pay back the money. As a reminder, international checks can take 10 to 15 days or even more to clear.

• A scammer promises to transfer money directly into your bank account. You provide them with your account information, but they mail your bank a check or money order with instructions to place it in your account. When you check your account it looks like the money has arrived electronically; however, you later discover it was a fake money order.


Can banks tell if a check is fake?


These checks look very real. Tellers receive a great deal of training on how to spot these checks, but even seasoned bank tellers may be fooled.


Why does the bank give me the money?


Under federal law, banks must make the funds deposited available to their customers usually within one to five days. But just because you can withdraw the money doesn't mean the check is good, even if it's a cashier's check. It could be a forgery, which can take weeks to detect.


What are my responsibilities with checks



Consumers are responsible for the checks they deposit, because they deal directly with the person who gave them the check. If the check bounces, you owe the bank the money you withdrew. A bank may sue you to recover the money and law enforcement may also get involved if they believe you were involved in the scam.


If you believe someone is trying to pull a fake check scam over on you, don't cash the check. Report it to your local law enforcement and the National Consumer League's National Fraud Information Center at www.fraud.org or US +1 8008767060


Fake Check Scams


How the 'fake check' scam works?

One increasingly common kind of spam offers 'vacancies' or 'work-from-home opportunities'. Some of these are conventional 'work from home' scams, but many are an even more unpleasant scam known as the 'fake check' scam.


In the 'fake check' scam (also known as a 'money transfer' scam or a 'mule job'), a scammer tries to recruit people to work as 'remote managers' or 'payment processors'. The scammer claims to be a foreign company that needs help transferring money earned abroad to their own bank. The deal is that you will receive payments for them and send them the money by Western Union or bank transfer. For your trouble, you get a 5% or 10% commission on each transfer. Money for nothing, right?


The reason that it's called the 'fake check' scam is because the 'payments' that the scammer sends you will typically be forged checks or other financial instruments. The forgeries are often very good and your bank may not detect them immediately. The check will clear and the money will be deposited in your account. You then send the scammer his money, keeping your 10%. But a few days later your bank detects the forgery and cancels the deposit. Suddenly, instead of earning a 10% commission, you've lost hundreds or thousands of dollars of your money.


It gets worse. First of all, the bank is legally within its rights to cancel the credit to your account. As the submitter of the check, you take responsibility for it. Moreover, by submitting a forged check, you've actually committed a crime. If the authorities think that you knew the check was forged, you can go to jail.


Variants


In another variant of the scam, no checks are involved. Instead, money is transferred directly from another account to your bank account. The other account is often the account of someone who fell for another scam, such as a phishing scam. Once again, when the scam is discovered your bank will cancel the deposit. You will lose your money and you could be charged with the crime of money-laundering.


How to detect this scam


You should be suspicious of any job that you see advertised by spam - legitimate companies don't send spam. If the 'job' offered involves handling money - receiving or transferring funds or payments - the odds are good that it's a 'fake check' scam. If the message explains that you earn your income by keeping a percentage of the money you transfer, it's definitely a scam.


The job title is another possible giveaway: 'fake check' scammers often advertise jobs with titles like 'sales support', 'remote manager', 'receivables clerk' or 'payment processor'. They also talk about 'commission-based' income, and explain that the job will only take a few hours of your time.


They usually have a list of requirements. If they require you to have a bank account (sometimes they say "you must have a bank account so we can pay you"), it's probably a fake check scam. Other requirements often include familiarity with Word and Excel, being an adult, or being available on the phone at certain times of day.


Don't be fooled into thinking that the company is real or legitimate just because their website looks good. Some of the sites run by these scammers look extremely professional.


What to do if you get a 'fake check' spam


Don't reply. If you want to report it, go to the website of the National Fraud Information Center or the equivalent in your country.


What to do if you've been scammed


Call your bank and your local consumer information service for advice. In the US, you can contact the National Fraud Information Center as well.


Online jobs scam


A new kind of scam is tempting internet users in the UK with the promise of commissions on money transfers for an overseas company.


But in fact they will be laundering cash stolen from others' bank accounts and credit cards. BBC News Online explains the background.


Haven't we heard all this before?


You may well have heard of the string of internet-based cons that almost anyone with an e-mail account is likely to have seen.


Fake lotteries that offer a million dolllars as long as a few thousand dollars is paid in "taxes".


Or the ubiquitous 419 scheme beloved of West Africa fraudsters, which offers a sizable slice of tens of millions of dollars "left" in a bank account by a dead dictator - but leads to massive losses and sometimes physical threats.


And most recently the "phishing" scam, in which e-mails apparently from your bank or building society ask you to go to a website - fake, of course, but cleverly mocked up to look like the real thing - and enter bank or credit card details. i81.photobucket.com

But this one is something new. Rather than rip off the mark, it aims to use him or her as a conduit for getting hold of the proceeds of other crimes, not least the phishing scam itself.


And it even offers payment for doing so.


So what do I look out for?


Whether in spam e-mails or - sometimes - in adverts on entirely genuine job search websites, people are being offered the chance to make hundreds of pounds a week by acting as an "agent" for a foreign company.


It might seem an attractive concept for people such as students and the unemployed, who may have a bank account and are in urgent need of extra cash.


All they have to do is agree to set up a new bank account into which they will receive money on behalf of a firm which supposedly has yet to set up offices in the UK.


Then they send it overseas through a money transfer agent.
i81.photobucket.com

In return, they are told they can keep a cut of the funds. One example seen by News Online suggests 7%.


They must, of course, supply their personal and bank details to the company - which in fact is a front for crooks in Eastern Europe where some countries, particularly Romania, have become notorious for computer crime.


But why are the fraudsters paying out real money?


They're giving a small slice away, to be sure.


But by money laundering standards, 7% is a pretty good deal.


Far from being payment for legitimate goods (it is sometimes claimed that plasma TVs are the commodity being sold), the transfers are in fact money stolen from other people's bank accounts.


The very people, in fact, who incautiously entered their bank details in the phishing con or have fallen foul of another method of fraud.


Since it is impossible to move money overseas simply by using online banking, the scammers need an intermediary to do the hard work.


And when the police come calling, the "agents" are left with the legal liability.


Not only that, but they have given away their own bank details, address and other information to the fraudsters.


Everything a crook needs to commit identity theft elsewhere - or sell on for use in someone else's criminal activities.


Have people really fallen for this?


Everyone thinks they know there's no such thing as a free lunch.


But con artists the world over trade on the fact that that there's always a proportion of people who think that they alone can spot the one genuine opportunity among the millions of rip-offs.


The methods used by the tricksters can be very convincing to unsuspecting consumers.


For example, in a number of recent cases of phishing, the fake site's graphics and design were very close to the real thing.


Only the web address at the top of the browser window may give the game away - and not everyone checks that.


The sites are hosted on computers in Eastern Europe and the US, and are shut down as soon as they have been used.


So what can I do to avoid it?


The simple answer remains the same with all internet scams.


If it sounds like money for nothing, it's almost certainly bogus.


The clever bit in this scam is the cash incentive - the money from the agency.


But is a few hundred pounds really worth becoming a money launderer?


While the police in the UK's National Hi-Tech Crime Unit (NHTCU) are going after the fraudsters themselves, it's much easier for them to track the agent in the UK.


Guess who's going to get arrested first.


So never click through links on official-sounding emails. Use the same discretion you'd use in the real world when dealing with the online environment.


Check for obvious spelling and grammar errors. Direct translations from Eastern European languages often miss out words like "the," for instance.


And above all remember the basic rule. If it sounds too good to be true, it almost certainly is.


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