Robert Siciliano Identity Theft Expert

As it becomes more difficult to get new lines of credit, identity thieves are being drawn more to commit check fraud.

Check fraud is a billion dollar problem. As predicted by the Identity Theft Resource Center, check fraud grew to 17% in 2008, increasing from 12% in 2007.

According to the American Bankers Association Deposit Account Fraud Survey Report, actual dollars lost to check fraud was $969 million in 2006, up from the reported $677 million in 2003. Of the $969 million dollars lost to check fraud;
# 27% cloned checks,
# 28% counterfeit checks,
# 38% return deposit,
# 7% alteration, kiting, check washing.

In a New York Post article a brazen ring of thieves enlisted crooked bank tellers to run a check-fraud scheme that was brought down when the crooks made the mistake of forging checks on a NYPD account. Two criminal hacker type ringleaders ran the counterfeit scam, using 950 “soldiers”, or “mules” to deposit and cash millions of dollars in counterfeit checks.

Three bank tellers were involved, stealing and selling customer profiles included names, Social Security numbers, and account numbers. Insider identity theft of this kind often equates to as much as 70% of all identity theft.

Check fraud victims include banks, businesses and consumers themselves. The system of cashing checks is somewhat flawed. Checks can be cashed and merchandise can be purchased even when there is no money in the checking account.

For a charitable organization I presented a program on motivation and self improvement at a women’s prison in Massachusetts a few years back. I requested a little background on the women I was speaking to just because I watch to many movies and I wanted to know If there was any possibilities I’d get shanked. The case worker informed me that about 80 percent of the women were incarcerated for check fraud and shoplifting. Seems when some people get a checkbook they consider it an opportunity to print money.

There are numerous forms of check fraud

Forged signatures; the easiest form of check fraud. Legitimate checks with a forged signature. This can occur when a pocket book is lost or stolen or a home or business is burglarized. If you have people in a trusted position coming into your home or business they can pull a single check out of a check book and pay themselves. Banks don’t often check signature cards until there is a problem and need to assign liability.

Forged endorsements; generally means someone stole a check and cashed or deposited it. There’s really nothing anyone can do to protect themselves from this other than protecting your checks. It is up to the consumer or business to check their statements carefully.

Counterfeit checks; anyone with a desktop scanner and printer can create a check and write it to themselves. In order to prevent your checks from being counterfeited make sure you shred all throwaway canceled checks and be sure to lock up any checks in your home of office. Consider a locking mailbox so nobody can access your bank statements and strongly consider going 100% online banking.

Check kiting or check floating; usually involves two bank accounts and money being transferred back and forth to show a balance and then withdrawn. The check is deposited in one account then cash is withdrawn without the sufficient funds to cover the check. Any time this occurs it’s generally the bank or whoever cashed the check that gets burnt, unless they are able to go after the person who used their own account.

Check washing; involves altering a legitimate check but the information was changed in the “pay to” and the amount is often increased. This is the sneakiest form of check fraud.

Check washing occurs when checks or other tax-related documents are stolen from the mail or by other means and the ink is erased using common household chemicals, like nail polish remover, allowing thieves to endorse checks to themselves. This is where 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 Inkâ„¢) that is absorbed into the paper’s fibers and can never be washed out. The pen is 2 bucks and available at any office supply store.

If you write checks to pay a bill and then put them in your mailbox for the postal carrier to deliver them, you are at a higher risk for check fraud. Thieves see that red flag up and go phishing for checks. I suggest using a uni-ball pen and taking checks directly to the post office or drop in a big blue box.

If you plan to do any online banking, which millions do, make sure your PC is protected with McAfee anti-virus software and all your critical security patches in your operating system are up to date.

Further, you can’t prevent all forms of identity theft. However you can significantly reduce your risk by making a small investment in your personal security by investing in Intelius Identity Protect or considering the options described in this blog post.

Robert Siciliano identity theft speaker discussing identity fraud and security

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