Amy K: Check Fraud Still an Issue
by Amy Kleinschmit
Chief Compliance Officer
5/20/2020

A recent Facebook post in South Dakota read, “Had our outgoing mail stolen last Saturday. Didn’t realize it until Monday morning when Pioneer Bank called to ask if we’d written an $837 check to [name]. Turns out she’d taken a check from our mail, written her name over the payee’s and bumped the amount to $837. Police apprehended her in the bank drive up…”

Staff and employee education are key in curbing check fraud. Training front-line staff how to spot counterfeit checks, forgeries, and alterations, like the one noted above, is important. CUNA Mutual Group has Check Fraud training modules available found under their On-Demand Webinars & Training.

When seeking to validate a check with the other financial institution, remember to use a telephone number of record not the number on the document/check. Ask for the "check fraud" department. However, some financial institutions no longer support this verification method.

As a reminder, with regard to U.S. Treasury checks for the recent Economic Impact Payments, the U.S. Secret Service issued a press release to detail the security features of these checks. You can find this guidance here. You may verify U.S. Treasury check issue information using the Bureau of the Fiscal Service Treasury Check Verification Application (TCVA) at: https://tcva.fiscal.treasury.gov.

USPS Money Orders can also be verified. If you suspect fraud, call the U.S. Postal Inspection Service at 1-877-876-2455. Before accepting a money order, make sure it is genuine. There are several key things to look at to spot a counterfeit money order.

Examine the Paper - Real USPS money orders have specific marks and designs to prevent fraud. There is a sample image of the security features at the above link.

Check the Dollar Amounts. If the dollar amount is discolored, it may have been erased, indicating fraud. Make sure the dollar amount is imprinted twice. Domestic money orders cannot be more than $1,000. International money orders cannot be more than $700 ($500 for El Salvador or Guyana).

Another important tool is in preventing check fraud is educating your membership on how to avoid check scams. The FTC’s Consumer Sentinel Network database shows that people reported more than 27,000 fake check scams in 2019, with reported losses topping $28 million dollars. Data suggests that fake check scams disproportionately harm young adults – especially people in their twenties.

The FTC has a number of articles and resources, including this article that lists several common fake check stories. To avoid these scams, here are a few tips the FTC provides:

  • If someone sends you a check and tells you to send money – whether by wiring money or buying gift cards – you can bet it’s a scam.
  • Even if you see the money in your account, the bank can still take it back if the check later bounces. If you don’t know the person who wrote the check, don’t send money. Period.
  • If you’re selling online, never accept a check for more than your asking price.

There are several additional helpful resources that can be found at several sites –

FakeChecks.org

FBI Fraud Alert Poster

Fraud.org

OnGuardOnline.gov

NCUA Fraud Prevention Center

CFPB Fraud and Scams Resources  

 

As always, CUAD members may contact Amy Kleinschmit with any compliance related questions. 

 

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