Hello, this is CoBank’s Fraud Wise, helping you avoid becoming a victim of fraud. This is Jamie Fiedor, senior financial crimes specialist at CoBank.
With so much focus on cyber security and internet hacking, it’s easy to forget that there are some old school frauds still being perpetrated today. One of these cons is check fraud, and both individuals and companies are at risk.
The first step in a check fraud is for the criminal to steal a physical check you’ve written, maybe from your mailbox, maybe from the recipient mailbox, maybe somewhere between the two.
The criminal can then do several things. They can pretend to be the recipient, and cash or deposit the check into their own account. To do this, they will, either forge the signature on the back or leave the endorsement blank. With the availability of ATMs and mobile check deposit, this has become even easier.
Unfortunately, stealing a single check may be only the first step for the criminal, who can use this first theft to commit further fraud. For example, they can use the first check as a template for creating counterfeit checks that they then use to make purchases or deposit into a bank account.
Or they can use the account number from the check to sign up for an automated ACH debit with service providers like utilities, or to further defraud the consumer directly. Both consumers and businesses can suffer reputational repercussions.
This type of fraud is difficult for you to notice because your bank account will show that the check was deposited. It’s only when you receive a second notice or a collection call, or see unexplained payments coming out of your bank accounts, that the red flag of fraud is raised. Reconciling your accounts on a daily basis can help you identify fraud quickly so you can take the appropriate steps to mitigate the damage.
Protecting against your check being stolen at the far end of its travels is, of course, outside of your control. But you can be more careful when you send a check. First, don’t put an outgoing check into your unlocked, personal mailbox – that raised flag is an invitation to a criminal set on check theft. Instead, install a locking mailbox, or mail your checks at a post office. Or, when available, drop them into a service providers’ lock box. Another option is to switch to online payments.
If you are a victim of check fraud, be sure to report it to your bank promptly. Your bank can then initiate a claim with the bank that accepted the fraudulent checks. Recovery of your stolen funds is likely, though it’s not guaranteed, and it could take 90 days or more.
The timeframe for reporting check fraud varies by state, so again, report any check fraud problem quickly.
This has been CoBank Fraud Wise, helping you protect against fraud.