Check Fraud is on the Rise
Fraud professionals have become increasingly skilled and sophisticated, thanks to advances in technology. Criminals today can defraud you and your financial institution quite easily with a blank check taken from your checkbook, a cancelled check found in your garbage, or a check you mailed to pay a bill. Therefore, it is important to follow a common-sense, logical approach with the way you use and store your checks.
TIPS
1. Make sure your checks are endorsed by your financial institution and incorporate security features that help combat counterfeiting and alteration.
2. Store your checks, deposit slips, bank statements and cancelled checks in a secure and locked location. Never leave your checkbook in your vehicle or in the open.
3. Reconcile your bank statement within 30 days of receipt in order to detect any irregularities. Otherwise, you may become liable for any losses due to check fraud.
4. Never give your account number to people you do not know, especially over the phone. Be particularly aware of unsolicited phone sales. Fraud artists can use your account without your authorization and you may end up being responsible.
5. Unless needed for tax purpose, destroy old cancelled checks, account statements, deposit tickets, ATM receipts (they also frequently have your account number and worse yet, your account balance). The personal information on it may help someone impersonate you and take money from your account.
6. When you receive your check order, make sure all of the checks are there, and that none are missing. Report missing checks to your bank at once. Should you fail to receive your order by mail, alert your bank. Checks could have been stolen from your mailbox or lost in transit.
7. If your home is burglarized, check your supply of checks to determine if any have been stolen. Look closely, because thieves will sometimes take only one or two checks from the middle or back of the book. The longer it takes to detect any of your checks have been taken, the more time the criminal has to use them successfully.
8. If someone pays you with a cashier's check, have them accompany you to the bank to cash it. If at all possible, only accept a check during normal business hours so you can verify whether it is legitimate. Make sure you obtain identification information from the individual.
9. Do not mail bills from your mailbox at night. It is a favorite location from which a criminal can gain possession of your check with the intent to defraud you. Criminals will remove a check from your mailbox and either endorse it using bogus identification, photocopy and cash it repeatedly, scan and alter the check or chemically alter it. The Post Office is the best location from which to send your bill payment.
10. Limit the amount of personal information on your check. For example, do not include your Social Security, driver's license or telephone numbers on your check. A criminal can use this information to literally steal your identity by applying for a credit card or loan in your name, or even opening a new checking account.
11. Don't leave blank spaces on the payee and amount lines.
12. The type of pen you use makes a difference. Most ballpoint and marker inks are dye based, meaning that the pigments are dissolved in the ink. But, based on ink security studies gel pens, like the Uniball 207, use gel ink that contains tiny particles of color that are trapped into the paper, making check washing a lot more difficult.
13. Don't write your credit card number on the check.
14. Use your own pre-printed deposit slips, and make sure the account number on your slip is correct. Thieves occasionally alter deposit slips in the hope that you won't notice and the money goes into their account.
15. Don't make a check payable to cash. If lost or stolen, the check can be cashed by anyone.
16. Never endorse a check until you are ready to cash or deposit it. The information can be altered if it is lost or stolen.
Be a Smart Bank Customer
Being a smart bank customer means being proactive about looking out for your own interests. Clever con artists are always looking for ways to separate you and your money. They thrive because individuals and businesses fail to observe some basic safeguards on bank accounts and their personal financial information. Fortunately, a few simple precautions will help you avoid being victimized. Some of the tips listed below may be familiar, but a reminder now and then helps reinforce them. Others will no doubt be new to you. Follow them all and be a smart customer!
Review and balance your bank statement as soon as you receive it. The law imposes a duty on a customer to promptly examine his bank statement and notify the bank of any alterations and forgeries, yet many people throw their unopened bank statements in a drawer, assuming they are correct and that there has been no fraudulent activity. It's devastating to discover, sometimes months or years later, that someone has stolen some of your checks (sometimes from the middle of a pack of checks in a box in a drawer or on a closet shelf) and has forged them, or that an employee, friend, or even a stranger, has altered the amount or payee on an item, making it payable contrary to the original way you wrote it, and that your account balance has been reduced or your check was paid to the wrong person because of the fraudulent alteration. The ONLY way to protect yourself from any loss is to spot the alteration or forgery quickly and promptly notify the bank. The few minutes you spend reviewing your statement could save you thousands.
Think of an ATM (automated teller machine) card as a key to your bank account. It's been designed so that no one can use that "key" except you, because you're the only one the PIN has been revealed to. It takes both the card and the PIN to make a withdrawal or access balance information. If you should lose the card, or have it stolen, a thief can't "unlock" your bank account because the key isn't functional without your PIN number. If you write your PIN on the card, however, you destroy the protective system. The automated teller machine can't tell that it's not you using the card; it's programmed to respond automatically and open your account when your personal number is punched in. If you must write your number down, put it in a secret place and don't indicate on the writing that it is a PIN number. If you place it somewhere in your wallet or purse, expect your account to be cleaned out when a lucky thief steals the wallet and correctly guesses that the four-digit number he finds inside is the key to getting your money.
Avoid using checks or deposit slips as scratch paper. Sure, we've all had instances when we needed to give someone our address or telephone number or some other information and didn't have anything to write it on. When that happens to you, don't view a check or a deposit slip as a good substitute for blank paper. It simply contains far too much information about you and your account. If you absolutely must use one, be sure you first tear off the portion that identifies your bank and the routing number and account number at the bottom.
Shred bank-related documents before throwing them away, even if they're old and even if they relate to a closed account. Throw away unused checks on a closed account and you may find yourself fighting to salvage your reputation if dumpster divers discover them. With a fake ID card, and sometimes even without one, they can paper the town with your checks, posing as YOU. When those checks are returned, marked "Account Closed," you're the one who gets the black eye and you'll face an incredible investment of time and effort clearing your name. Throwing away unused deposit slips on an existing account and you may find that thieves use the information on them to manufacture paper drafts to send through to debit your account with. Bank statements and even cancelled checks provide sensitive information that needs to be shredded -- not thrown into the trash where it's accessible.
Safeguard your credit card receipts and credit card convenience checks. After you have charged something, keep your copy of the charge receipt. Even if the item is not deductible for tax purposes, the receipt may prove to be a valuable record in the event the item you purchased was stolen or destroyed and you need to establish its value. In any event, you should always hold on to the receipt until your statement arrives to be certain the charge amount is correctly reflected on the statement. And never throw away the convenience checks that may be sent to you on your credit card account without first shredding them. Someone forging your name on the signature line can tie up your credit line until you get the problem resolved and rob you of the time it takes to communicate successfully to the credit card issuer that the checks were forged.
Think very carefully before adding someone as a joint owner on your bank account or safe deposit box. When you grant someone else the privileges of joint ownership on your bank account or safe deposit box, you put your financial well-being in their hands. They can write checks to the same extent you can on your account, or they can access the safe deposit box just like you. That's a lot of power, and, frankly, experience has shown that some people don't wield that power wisely or in the best interests of the original account owner. If you're going to grant that power to someone, choose wisely. And if your desire is to simply allow someone else to have access to your account or box in the event you are unable to do so yourself, consider executing a durable power of attorney just for that purpose. That way, the person you appoint is required to conduct transactions on your behalf -- not their own!
Wait to sign a check until you're ready to deliver or mail it and wait to endorse a check written to you until it's time to cash or deposit it. One of the worst time-saving ideas of all time is signing all checks in your checkbook ahead of time to speed the process. If your checkbook is lost or stolen and it contains pre-signed checks, that's a thief's bonanza. They can fill it in with the amount and payee of their choice. The signature's real and your bank has no way of knowing that the completion of the check wasn't authorized. And if you indorse a check made payable to you, you've just created what's called "bearer paper" -- it may be cashed by whoever bears it. When it comes to signing or indorsing checks, timing is everything.
When you receive a phone call from someone who asks for your bank account information or credit card number, "Just Say NO!" Boiler room shysters and scam artists can be smooth-talking and convincing. They may give reasons for wanting your financial information that sound plausible, for instance claiming that you've won a prize, or that they are seeking the information to protect you from a scam, or they're an officer of your bank or credit card issuer. If they say you've won something, tell them to send you a check or deliver the prize. If they say they're trying to protect you from a scam, ask who they're with. Contact the local authorities and report the call. And if they say they're an officer of your bank or credit card company, they don't need to ask YOU for your account information -- they would already have it.
When you write a check, fill the payee line and the amount lines completely. If the name of the payee or the amount doesn't fill the space, draw a horizontal line to fill it. If you leave space, you create an opportunity for someone who gets possession of your check, either legitimately or otherwise, to add an alternative payee or to increase the amount. Guard against such alterations by eliminating the space necessary to make them.
Avoid sending someone to use your ATM card. We've heard the story all too many times. You give your ATM card to an employee, a coworker, a family member, or a friend, along with your PIN number and direct them to withdraw a certain amount of cash. It's not until you start mysteriously having overdrafts on your account or you get your statement that you realize they deviated from your instructions and withdrew much more than you authorized. Who's liable? You are, because you were the party in the best position to prevent the loss. If, in an emergency situation, it's necessary to do this, call your bank afterwards to verify the amount of the withdrawal and, if necessary, have the old PIN number revoked and a new one issued. There have been many occasions where a roommate, for example, was authorized, on a one-time basis, to make a withdrawal, but once they knew the PIN number, they secretly obtained possession of the card at other times and made withdrawals the account owner knew nothing about. Don't let it happen to you!
Resource: National Check Fraud Center
