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Why You Need to Keep Your Eyes on Your Checks


Why You Need to Keep Your Eyes on Your Checks

While cybercrime makes all the headlines, old school checks have not fallen out of favor with thieves. In fact, according to EZShield, Inc., a patent holder of check fraud protection, checks are still the most targeted payment form in businesses.

“The Council of Better Business Bureaus released a list earlier this year of the most ‘risky’ scams, and fake checks were number two. This includes money orders and cashier’s checks. The ranked list was based on how likely people are to be targets, how likely they are to lose money, and how much money they lost,” says Krystal Rogers-Nelson, a financial and cybersecurity expert with asecurelife.com.

“Fake checks can be so risky because banks are required to make funds from deposited checks available within a couple of days, but discovering a fake check can sometimes take weeks. If you deposit a check and it bounces, even if it seemed to clear initially, you will be responsible for repaying the bank.”

What can go wrong?

Plenty. “While I cannot speak first hand on issues and schemes, what I can tell you is what we hear and see quite often. The two most common complaints from our clients are `check washing’, and theft of pre-printed check stock,” says Erik Harris, eCommerce manager for the Troy Group, a provider of MICR/check printing solutions.

Check washing involves altering a legitimate check, changing the name of the payee and often increasing the amount. “This is the sneakiest form of check fraud. When checks or tax-related documents are stolen, either from the mail or by other means, the ink can be erased using common household chemicals such as nail polish remover. This allows the thieves to endorse checks to themselves. In this case, something as simple and inexpensive as a select uni-ball pen can help. Select uni-ball pens contain specially formulated gel ink (trademarked Uni-Super InkTM) that is absorbed into the paper’s fibers and can never be washed out. The pen costs two bucks and is available at any office supply store,” says Robert Siciliano, CEO of IDTheftSecurity.com.

Counterfeiting checks is much easier to do than it used to be.

There are numerous ways to get scammed. “Counterfeiting checks is much easier to do than it used to be. Computer programs are readily available to enable a counterfeiter with the account number and routing number of the bank to create legitimate looking counterfeit checks,” says attorney and author of Identity Theft Alert Steven Weisman.

But just like there are ways to get taken, there are ways to make it more difficult for thieves to get away with the schemes.

“The most advanced technique that banks are using is a system referred to as ‘Positive Pay’. This is a system that authorizes banks to only pay checks that are made to payees on a predetermined list you establish with them. This can be very effective but somewhat limiting if you need to use checks to pay vendors that change frequently,” says Justin Lavelle, chief communications officer for BeenVerified, a provider of online background checks and contact information.

According to the Positive Pay website, positivepay.net:

Positive Pay requires the company to send (transmit) a file of issued checks to the bank each day checks are written. When those issued checks are presented for payment at the bank, they are compared electronically against the list of transmitted checks. The check-issue file sent to the bank contains the check number, account number, issue date, and dollar amount. Sometimes the payee name is included, but is not part of the matching service.

When a check is presented that does not have a "match" in the file, it becomes an "exception item". The bank sends a fax or an image of the exception item to the client. The client reviews the image and instructs the bank to pay or return the check.

There is generally a fee charged by the bank for Positive Pay, although some banks now offer the service for free. The fee might well be considered an "insurance premium" to help avoid check fraud losses and liability.

Weisman offers a few ideas, “It is important not to mail checks from your personal mail box or even U.S. Postal service mail boxes because increasingly, identity thieves and other criminals are stealing mail from these sources and using the stolen information for identity theft and other criminal purposes.  You are much safer paying bills electronically. Businesses may also want to use checks with special safety features that make them harder to counterfeit, however, these are somewhat costly for ordinary consumers.”

Have your bank call, or set up text alerts if checks are presented on your account over a certain dollar amount.

Furthermore, Lavelle, says to make sure you reconcile your bank statements to look for fraudulent transactions. Have your bank call, or set up text alerts if checks are presented on your account over a certain dollar amount.

Diane Morais, president of consumer and commercial products for Ally Bank, says to “Check your checks. Store blank and canceled checks securely. Report lost or stolen checks immediately. Use your checks in order and look for check numbers out of order on your statements. A check number out of order could indicate fraud.”

Sign up for paperless statements. Switching to paperless statements could help prevent identity theft resulting from stolen mail. Since statements aren’t mailed to your home, mail thieves won’t get access to your checking account number if they intercept your mail.

Martin | | Comment #1
Most of the issues described in this article are from the past. Almost all, if not all banks can be instructed to send notice when ever a transaction greater then $1.00 is presented for withdrawal. Furthermore, you can instruct the bank(s) not to cash the deposited checks or even debit card charges of certain upper amounts, before your approval.
Avoid paying with checks is the best remedy against fraud.
Bogie | | Comment #2
Definitely not ALL banks.

" Avoid paying with checks is the best remedy against fraud." Against check fraud that is. Of course, then there is always credit and debit card fraud. Financial transactions, whether paper or electronic, are all subject to the possibility of fraud. Then we have cash transactions being over scrutinized by the authorities with some looking only for a quick payday. The average person is always a target and just can't win.
Stan | | Comment #3
Cash can get lost or stolen and you have no recourse. Almost any transaction process can be subject to fraud. Your bank can be hacked and account and personal information stolen.
Sams | | Comment #4
Bogie, you wrote "Against check fraud that is." Not necessarily check fraud only. Martin is right, from the check the bad guys can find your account number, real name, address, signature, your handwriting style, ABA number even your fingerprints.
Sophisticated hackers can create a phony ID from that info and your SS# and DOB can be obtained from different sources without problem. There are many phony companies that can pull money from your account if they get their hands on your check, only your account number, ABA number and your name is needed.
Bogie | | Comment #5
Yes, Sams, I agree. That comment was in response to "checks". Anyone with any type of bank or CU account is subject to the same type of fraud that you pointed out. I believe we all know the inherent dangers of most of the fraudulent activities we could possibly become victims of in our modern computer age.
Bozo | | Comment #6
The weirdest conversation I ever had regarding checks was with a banker over three years ago. My Mom was in the nursing home, I (theoretically) had POA, and needed to write checks to cover her bills. I asked the banker how I should sign the checks. She said (I kid you not), "it doesn't matter, as all the computer scans is the dollar amount and the account." As I thought to myself, well, great, then why bother with signature cards?

I could, theoretically, have signed the checks "Joe Blow", cleaned out the account, and made off to Brazil.
Lrdx | | Comment #7
I never understand why is "signature" even considered as a security measure. Noone ever bothers to check it. As your story shows, not even banks.
Stan | | Comment #8
Years ago someone made a duplicate charge card of mine and made all types of purchases including air line tickets. I called the credit card company when I saw the charges I didn't make. An airline sent hard copies as proof that I made the charges with hard copies with my signature and a card impression. I had to send a copy of my drivers license so they could compare the signature. I also noted to the cc company that the fake did not have my full first name. So the signature may come into play after the fact.
??? | | Comment #11
#8 Stan
unfortunately an X still passes on a cc
Stan | | Comment #13
Agreed it will pass but after the fact you may need to prove a signature
Bogie | | Comment #9
Machines may not scan signatures, but some alert bank tellers do. For people who still do business face to face that is. Even though we live in the "electronic" age, signatures are not all "out of date".
Stan | | Comment #12
How do they compare signatures?
Stan | | Comment #14
I remember when I was a kid that they would check the signature on a withdrawal slip with the signature on your signature card.

I only withdrawal cash at ATM so no signature. I always sign my wife's name to cash checks made out to her. At Chase if you deposit cash at the teller you have to use your ATM card and pin to make a cash deposit. I use the ATM for deposits and withdrawals. In the past signatures were checked when you used a charge card. That no longer takes place.
DifferentStrokes | | Comment #10
I have been contacted when my signature did not appear to match that on the check, before the bank would clear the check.

So, some banks do a better job than others.
Interested | | Comment #15
Unlike fraud under Regulation E (Electronic Funds Transfer Act), for dealing with check fraud those matters are governed by the provisions of Article 3, Negotiable Instruments, of the UCC (https://law.cornell.edu/ucc/3) that have been incorporated in state statues (and various and sundry court decisions). Good luck, my friends, because you’re in a contractual dispute with the bank.
If you can, pay your bills online—easy to track and easy to prove.
mytrophywife | | Comment #16
I had to chortle,,,,i was talking to my TROPHY WIFE,,,,while she was slipping into her avengers honor blackman italian leather jump suit, and 2 thousand buck loub boots how i miss the good old days when banks would send you your original checks back with your monthly statement, which devolved to a image of said checks and then finally a line entry. IT'S ALL ABOUT MAX PROFIT ON THIS LABOR DAY and everyday, for the always despicable banking biz.
Stan | | Comment #17
I prefer not to get checks back or a paper statement. All checks are listed and I can print most from my online account. Some companies do not foward the hardcopy
to the bank so they don't even have a hardcopy of the check; Just a line item with the check # and the entity that cashed it. One grocery store near me scans your check at the register and debits your account. They hand you back a paper check. I only use checks to pay credit card bills. I don't want them to have ACH access to my checking account.
mytrophywife | | Comment #18
i have to kvell, when you have a TROPHY WIFE that is honor blackman gorgeous,,,,albeit in her 40's,,,,you can't have a paranoid or jealous streak,,,,and that extends to my personal finance.
Bozo | | Comment #20
To poster "mytrophywife" (re comment #18): I suspect the definition of a "trophy wife" is subject to interpretation. My definition would be a person I married almost 50 years ago, who is a great mother and grand-mother, That's a trophy wife.

What "kvell" means is beyond me. Is that a neologism?
alan1 | | Comment #22
Bozo -- it is not a neologism; it's a word in American English (no idea about other English-speaking countries). It means elated and bursting with pride. It comes from Yiddish. Feel free to start kvelling about whatever, but don't do it too frequently or too loudly.

I'm editing this to add a definition from the New Oxford American Dictionary (3rd ed.).
"feel happy and proud: my mom was kvelling—bursting with pride"
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Bozo | | Comment #25
Alan1, learn something new every day. Conjugate "kvell", as I am confused.
alan1 | | Comment #26
I'm not familiar with this source; I've glanced at it and the conjugation looks right to me.
Bozo | | Comment #29
Alan1, well, we will kvell. Rhymes, doesn't it?
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Susan | | Comment #21
ITA with all points made about checking accounts. I hate them! Unfortunately, I now live in an area (Florida) where they LOVE checking accounts! Before I moved here, my last check was written in 1987. Checks are required for my HOA and for local grasscutting/landscaping services, house cleaning services.

What I've done to help mitigate the situation: I've opened another checking account with my local credit union. No fees. I keep only a minimal amount in that account. If anyone tries--and succeeds--in taking unauthorized funds from that account, at least I'm not wiped out. My main checking account, on which no checks are ever written--has more money in it than I care to risk.
Stan | | Comment #23
Why keep a large sum in any checking account? You can keep the funds in a savings account. Some like Dollar and GS bank have next day ACH transfers. I've had a checking account and never had a problem with someone stealing or altering checks. Most of my bills are paid electronically from my checking account so the only checks I write are to credit card companies which I will not allow access to my accounts.
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