Check fraud is on the rise, at least in the US

[Markverhyden]

Not sure about other countries. Link below to an unlocked article about this in todays digital WSJ. This happened to a customer of mine last year. They had a check stolen, after it had been mailed, which was for around $400. Whoever intercepted it altered the check to over $40k and deposited it out of state and then was able to withdraw the money very quickly. Fortunately for them they are very good record keepers plus their GL policy included coverage for fraud. Got their money back in under a week.

High-Tech Banks Grapple With a Rise in Old-Fashioned Crime: Check Fraud

Banks are working to reimburse victims more quickly, but recouping funds is complicated.

www.wsj.com

 

[timeshifter]

The exact crime described happened to one of my clients, a commercial real estate company. They had mailed a payment, someone fished it out and altered the check.

 

[Blues]

Sadly I can say banks no electronically process most checks and this means no human looks at a check it mostly just blindly goes through so if you don't steward your own account regularly its easier for a lot to disappear at once.

Banking standards still say the written word line of your checks is the legal line yet when processing checks majority are processed through an OCR type system reading the numeric box and if you make a large common 1,000 turns into 11000 to the OCR and suddenly your missing an extra 10k. This happens without malicious intent far too often and if mistakes happen this easy how difficult do you think fraud can be? The only upside is that an individual will have a difficult time passing a fraudulent check and never being caught due to video records and/or photo ID records often kept as part of the process.

 

[Computer Bloke]

Not sure about other countries.

Let me add one data point: New Zealand has had no cheque* fraud since late 2021, which is when the banks all stopped accepting them.

In other news, cowrie shells are no longer accepted as legal tender.

Now, let's talk about socialised healthcare and the metric system...


* Yes, that's how we spell it.

 

[timeshifter]

Let me add one data point: New Zealand has had no cheque (yes, that's how we spell it) fraud since late 2021, which is when the banks all stopped accepting them.

What has taken their place?

 

[britechguy]

What has taken their place?

EFT, if memory serves. (Regardless of whether that's done via online EFT or something like a debit card where one would normally write a check).

I'm actually glad that's not the case in the USA because, at the moment anyway, any form of EFT that's not a "bank to bank" kind of thing involves all the middle-handlers skimming something off.

When I was actually running a retail art gallery many moons ago, I hated debit cards the most of all forms of payment. Invariably more was taken out of debit transactions than credit transactions, which, to me, was bass-ackwards.

My own credit union has a system in place where any member can transfer funds to any other member without either member having even the vaguest idea of the actual account information for the other. You generate what amounts to a pseudo account number (but it's much shorter) and if you want funds transfered into that account, and someone else has that pseudo account number, they can do just that. It's a one-way thing where you, the account owner, can initiate a transfer out but no one else could do so and you specify where that transfer is going to with that pseudo account number. Theres' no fee involved in that, and I'd be thrilled if this system were to somehow become able to be used across the banking system as a whole. PayPal eats part of your transfers and Zelle is not something I want to use for a number of reasons.

 

[Computer Bloke]

What has taken their place?

Cash, credit and debit cards, Google/Apple Pay and Internet banking.

Cheque use had been declining for years before they were finally phased out and nobody (that I know) seems to miss them. The recent unpleasantness* made touchless payment much more attractive and might have been the final straw.

I'm actually glad that's not the case in the USA because, at the moment anyway, any form of EFT that's not a "bank to bank" kind of thing involves all the middle-handlers skimming something off.

Perhaps the problem is with the existence of third-party payment processing, not with EFT per se? New Zealand has a simpler banking system with far fewer retail banks than the USA which probably makes it easier, but electronic payment systems have been working successfully around the world for decades and for many of us accepting or refusing payment on the basis of whether two squiggly lines match seems hopelessly archaic.


* No, not that one. The other one.

 

[carmen617]

Check fraud is huge here in my part of Massachusetts. The local post offices all say to never put checks in your mailbox with the flag up (duh) or in their blue boxes - all checks should be brought directly into the post office. Apparently, the blue boxes all use the same master key, and the crooks have gotten their hands on it. How long did it take before they figured out which part of their own process was a problem?

I hope they don't stop processing checks in the US, that's my preferred method of payment, as they create a nice record for my taxes, and nobody is taking a cut. In 25+ years, I've never been given a bad check. But I certainly wouldn't mail one any more!

 

[britechguy]

New Zealand has a simpler banking system with far fewer retail banks than the USA which probably makes it easier, but electronic payment systems have been working successfully around the world for decades and for many of us accepting or refusing payment on the basis of whether two squiggly lines match seems hopelessly archaic.

I am sure that the actual banking systems elsewhere in the world lack some of the notable problems (now quite in the news) of the US banking system, particularly when regulatory oversight is lax.

But, unlike you, I think that there are plenty of "very tried and true" things that are as relevant today as they ever were. Checks/Cheques are one of those things. My primary payment acceptance method is by check, and second is cash (rare, but it does happen). I have never taken credit cards and don't intend to because it's more trouble than it's worth for the business volume I do and the fact that I have virtually never had anyone balk at writing a check. I've never had one bounce (like @carmen617).

But I have no fear of sending them by mail, either. It comes down to probabilities, and the probability that one of my checks would be intercepted in transit is very small, and since mine are hand written to "very old school standards" it's virtually impossible to alter them. I figure I'm about as likely to be hit by check fraud, particularly given how infrequent it is that I send one, which is not even 10% of the number I write, which is few, as I am to be hit by a meteorite on my daily walk. There could certainly be differences regionally, that's for sure, but here where I live it's pretty much a non-entity.

 

[Metanis]

I'm old enough to remember using the 3 to 5 day check processing "float" to stay alive until payday!

 

[NviGate Systems]

Same here,although my bank have me stern warnings when it failed one time and let me know it was known as "kiting" if memory serves.

I would write a check to myself, knowing I get paid in a day or two. Sadly one time the timing didn't work. Btw, I was like in my late teens early twenties, so kinda dumb.

 

[britechguy]

it was known as "kiting" if memory serves.

That's correct.

I don't think I've had an account at a bank, and I mean a bank, since I was in my early teens. My primary account, to this day, is at a credit union in my hometown.

They were the first place willing to issue me a credit card when no one else would (and I never applied until I was employed in IT for at least 6 months). My favorite story about them, though, was when I went home for a Thanksgiving visit and my paycheck (figurative) was supposed to have been electronically deposited on the Wednesday prior to the holiday, but the processing was somehow delayed. I went in to withdraw some money for the remainder of the weekend on Friday, only to find I didn't have enough. The response from the teller, who'd known me from the time I was a child, was, "Oh, Brian, don't worry about that. We know that your pay is electronically deposited and should have been here but for a holiday processing delay." They gave me the amount I wanted and held the withdrawl slip until the deposit had actually run, as they knew it would. That sealed my loyalty for life (and I could probably do the same thing to this day - once you're a known quantity some latitude is allowed when things are not quite timely due to processing delays).

 

[Blues]

I'm old enough to remember using the 3 to 5 day check processing "float" to stay alive until payday!

Pretty sure people still do this or at least attempt to do it and there are many ways and places where full validations aren't or can't be done that enable this.

 

[Markverhyden]

Pretty sure people still do this or at least attempt to do it and there are many ways and places where full validations aren't or can't be done that enable this.

Many, if not most retailers, use check approval services. Part of that process is to verify the customer's account has a balance and transaction history that can support that transaction.

Back in the day, when I lived in New Orleans before ATM's were available, everyone one knew their neighborhood bartenders so they could cash a check outside of banking hours.

 

[autumn]

Let me add one data point: New Zealand has had no cheque* fraud since late 2021, which is when the banks all stopped accepting them.

In other news, cowrie shells are no longer accepted as legal tender.

Now, let's talk about socialised healthcare and the metric system...


* Yes, that's how we spell it.

Seen something yesterday saying basically Australia is going the same way. I think the date was in 2025.

Honestly I have 1 customer which sends me a cheque. And it's a pain. Glad to see them go.

25 years ago I went to the bank once a week, now when I get these cheques (once a year), about 15 years ago I had a retail store and it was a daily trip to the bank. I don't even handle cash anymore, 99.999% EFT (Electronic Funds transfer), which use to take a couple of days to process now instant (mostly). Every bank in Australia has a BSB number and then an account number for customers. These are all that is needed to transfer fund.

 

[GTP]

Seen something yesterday saying basically Australia is going the same way. I think the date was in 2025.

Honestly I have 1 customer which sends me a cheque. And it's a pain. Glad to see them go.

25 years ago I went to the bank once a week, now when I get these cheques (once a year), about 15 years ago I had a retail store and it was a daily trip to the bank. I don't even handle cash anymore, 99.999% EFT (Electronic Funds transfer), which use to take a couple of days to process now instant (mostly). Every bank in Australia has a BSB number and then an account number for customers. These are all that is needed to transfer fund.

I wont miss cheques either. I havent written a cheque for over 10 years.

Clients who give me a cheque are politely told to use EFT, CC or cash.
Such a pain to have to physically go to a bank branch to deposit them. With banks closing branches left right and center it means having to drive 20 mins to a regional branch to deposit.

 

[britechguy]

Such a pain to have to physically go to a bank branch to deposit them.

Who goes to the bank to deposit checks these days? I've been using the mobile deposit feature of my credit union's app for years now. I don't know of a financial institution in the USA today that doesn't support mobile deposit (which is, of course, for checks).

 

[Computer Bloke]

Who goes to the bank to deposit checks these days?

Who needs email when we have a perfectly functional fax network?

Serious point: Mobile cheque/check deposit is a solution to a problem that doesn't need to exist. Like, oh, employment-linked health insurance or recyclable plastic water bottles. Once you rip the Band Aid (RoW: sticking plaster) off the underlying problem becomes apparent and can be fixed.

(Yes, I know we're not going to agree on this - possibly on any or all of three counts. I'm getting used to that!)

 

[britechguy]

@Computer Bloke

I have nothing to do with whether checks (cheques) continue to exist or not. I don't particularly have any attachment to them, either.

But I'd imagine that in any country where they are still in use that mobile deposit would be available. I was reacting to the need to go to the bank to deal with them. That's not been the case in the USA, unless you choose to do so, for some time now.

In the list of things I'm willing to lobby for, getting rid of employment-linked health insurance would be way, way higher on the list than getting rid of checks. Most of my banking is via EFT, and has been for quite a while, but dealing with a check when I get one takes all of 3 minutes with my smartphone.

 

[GTP]

I've been using the mobile deposit feature of my credit union's app for years now.

What you do on your phone is of absolutely no interest to me.

I have never and will not ever use a banking app on a device that by its very nature is as secure as a bag of $100 notes laying in a busy street.
I use my phone for calls/text, Pokemon and Signal. Nothing more.



Btw, the amount of cheques I get now is down to 1 "in a blue moon."
So its not the hassle it used to be.