All About Traveler’s Check Refund Fraud ("TCRF")

What are Traveler’s Check Refund Fraud ("TCRF")?

 

Traveler’s Check Refund Fraud ("TCRF")
is a quick scam, usually completed within one day, and usually involving $500 to $3,000. It occurs when traveler’s checks ("TCs") are purchased and the purchaser then claims he "lost" them. Replacement TCs are then issued and the purchaser cashes both sets, doubling his money.

Traveler’s Checks Refund Fraud is a quick scam usually completed within one day and usually involving $500 to $3,000.

Frauds Not Usually Prosecuted

TCRF is very rarely, if ever, prosecuted, even when the person does it under his own name and gets caught. The reason for this is that the TC companies don’t want it advertised how easy it is to accomplish. If they were to prosecute these cases, then the problem would mushroom for them and anyone bent on larceny who could read a newspaper might jump on the bandwagon. The TC companies make millions from the 1%% sales commissions and the interest they earn on the money used to purchase TCs, hence they can easily absorb minor TCRF losses. In the last 25 years this author has pulled off at least 35 TCRFs, about 10 of them in his own name. Not once has he ever been prosecuted.

Rundown on Traveler’s Checks

TCs are somewhat like money orders but whereas money orders are cashed by another party, TCs are cashed by the purchaser. TCs are sold in denominations from $10 to $500 by mega-corporations such as American Express, First National City Bank, Barclay’s Bank, Thomas Cook Co., etc. They are sold at nearly all banks, AAA offices, and travel agencies for face value plus a 1%% fee. (Sometimes the 1%% fee is waived.) When they are purchased, the buyer signs the signature line on each TC. When one is cashed, the countersignature line of each TC is signed. Theoretically the casher then compares the two signatures for a match instead of requiring ID. In reality most every casher asks for ID anyway. If the TCs are lost or stolen, the TC company issues replacement TCs. When the TCs are purchased one receives a receipt with the TCs’ serial numbers and an 800 number to call in the event of loss or theft. He is told to keep this receipt separate from the TCs.


Traveler’s Check Refund Fraud is very rarely, if ever, prosecuted, even when the person does it under his own name and gets caught. The reason is that the Traveler’s Check companies don’t want it advertised how easy it is to accomplish.

Refund Processing I

When TCs are lost or stolen, the customer calls the 800 number. If he says that they were stolen the company will require him to go file a police r eport; "lost" ones do not require this step. The company will ask for the serial numbers of the TCs purchased, of the TCs cashed, and of the TCs lost. These will be read off the receipt by the customer. The customer will be asked where and when he purchased the TCs.


He will be asked his biographical data, such as date of birth, full name, address, Social Security number and his ID card details (i.e., drivers license number, employee ID number, welfare ID number, etc.). He will be asked if he has ever made a refund claim for lost TCs previously. A yes answer will kill the instant refund right there. While the customer is on "hold," the company will check its computers to ascertain if the customer ever made a refund claim in recent years or if the customer’s address, date of birth, or Social Security number has been used in the recent past in other refund claims.


When the company comes back on the telephone line after this lengthy hold, the customer is then informed of either two things: (1) An immediate full or partial refund has been authorized and the customer is directed to a bank or travel agency to pick it up. (Immediate full refunds are usually given if under $3,000; an immediate partial refund is usually given if the claimed loss is $3,000 or greater.) The customer is given a "Refund Authorization Code Number." Or (2) they’ll say, "This claim needs further investigation. Please call tomorrow." When they say that it means the claim is dead and no refund will issue because they’ve detected a fraud pattern.

Refund Processing II

If a refund has been authorized, the customer then proceeds to the location of the bank or travel agency that they were directed to by the 800 operation of the TC company. The customer hands over his TC receipt, ID, and gives the Refund Authorization Code Number. The person in charge may or may not call the TCs 800 number before requiring the customer to fill out a Refund Affidavit. After this is done, the new TCs are issued on the spot.

Requirement of ID

A photo ID and one other piece of ID are usually required to gain an immediate TC refund. For the photo ID a drivers license, state nondriver ID, employee ID, welfare ID or a gun permit will do. For the second piece a library card, credit card, voter card, insurance card, or a fishing or hunting license will work. The person taking the refund affidavit will usually photocopy these for the TC company.


The following stories have worked: "Our rented canoe tipped over and the traveler‘s checks were lost in the river," and "Our kid burned them up in our campfire."

Plausibility of "Loss" Story

On the phone to the TC company’s 800 number one must explain the circumstances of how he "lost" the TCs. One must appear to be credible. The following stories have worked: "Our rented canoe tipped over and the TCs were lost in the river," "Our kid burned them up in our campfire," "I mistakenly threw them out with the maps and other trash when I cleaned out the car at the rest stop." One story that didn’t work was "My wife got mad and fed them to the garbage disposal because she didn’t want me going to Atlantic City without her." The story should be believable ¾ it usually has to be repeated during the refund affidavit process and should be some sort of travel-related tale.

Cashing The "Lost" TCs

In years past it was easy to waltz into a bank, casino, or racetrack, plunk down $1,000 worth of "lost" TCs, and cash them without a problem. Computer systems were primitive and it was too much trouble for a cashier to call the TC company and be put on a lengthy hold while they checked out the TCs serial numbers. Nowadays things are different and a cashier faced with a large amount of TCs may very well have the ability to quickly determine whether the TCs are hot. Thus it is inadvisable to cash a large amount at once in one of these types establishments. (Of course, if the "lost" TCs were cashed immediately prior to the refund claim, it should not affect the refund because the checks would then be in the banking pipeline and not yet returned to the TC company, hence the TC company would not know they had been cashed.) The best way to deal with them after the refund is to cash them one or two at a time in stores, gas stations, and the like. They’re accepted like cash and the change is handed over. Further, the sales receipt given is a "cash receipt." So if a $100 TC is used to purchase a $10 T-shirt, one receives the $90 in change, plus gets a cash sales receipt for the T-shirt which can be used to return the T-shirt later for a cash refund. Also supermarket check-cashing booths are a great place to unload one or two at a time; you don’t even need a courtesy card. Remember that the cashier doesn’t take the loss; the TC company does.


Supermarket check-cashing booths are a great place to unload one or two at a time; you don’t even need a courtesy card. Remember that the cashier doesn’t take the loss: the traveler’s check company does.

Aftermath

When the "lost" TCs are cashed and work their way through the banking system back to the TC company’s headquarters, the TC company will compare the signatures and countersignatures and make a preliminary assessment as to whether the countersignatures are forged or genuine. If they think they are genuine they will usually write the customer a certified letter. They’ll state their suspicions and request the customer send them the money for the cashed replacement TCs. Sometimes they’ll threaten a lawsuit or even threaten to go to the law. Sometimes they’ll send a second affidavit and request the customer to fill that one out declaring that the countersignatures are forged, and to mail it back. These scare tactics are always idle threats, however, and this writer has always torn up the letter without further developments. Of course if phony addresses and ID are used, the scammer never receives this threat letter at all.


The story should be believable ¾ it usually has to be repeated during the refund affidavit process and should be some sort of travel-related tale.

Use of TCRF as Unauthorized "Loans"

A friend of the author used TCRF for an unauthorized and interest-free loan. He needed $2,000 immediately but only had $1,000. About two weeks after the TCRF went down and he was flush, he walked into an American Express office and told them that he had "found" the "lost" TCs and had cashed them but was sorry and was here to pay it back. They gladly took his $1,000 and he never heard another peep from them.

Canadian Dollar TCs

American Express sells TCs payable in Canadian dollars, but they look just like U.S. dollar ones and nobody even notices the small print, "payable in Canadian Dollars." American Express and American banks sell them, presumably to people who are going to vacation in Canada. The face value fee depends on the daily currency exchange rate. This author purchased $2,000 in 50s for $1,500. He then spent the day cashing them all over town, in U.S. supermarkets. In not one of the 40 transactions did a cashier notice the small print about being payable in Canadian Dollars. In every case $50 was forked over, instead of the correct $37.50. Since this was done without use of an alias or phony ID, it might not even be fraud. In any event, nothing ever came of it.

Conclusion

TCRF is rather small time stuff unless someone were to perfect a method to do a great many of them. Even if that person were able to do it, and had an inexhaustible supply of IDs, addresses, etc., it is likely that the TC companies’ computers would soon detect a fraud pattern nevertheless, perhaps by geographic area alone. But small-time to one person is not small-time to someone else. Knowing this information could save your ass someday and get you out of a tight spot. My first TCRF involved only $200. As a youngster and ATF fugitive in 1973, I found myself down to my last $200 and at the Grand Canyon to get a job/housing doing menial labor for Park Service contractors. As soon as I found out that I had to submit fingerprints because it was a National Park, my plans were dashed. But I’d heard a brief rundown on TCRF from Abbie Hoffman’s book, Steal This Book, and I took my $200 and turned it into $400 using the Grand Canyon National Bank to buy the TCs and a bank in Flagstaff to make the refund claim. Worked out just like Abbie said it would. Wound up with enough money to get to Denver and get a new apartment. Knowledge is divine. So as the TV commercials declare, "Don’t leave home without them."l


"Knowledge is divine!"

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