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Penny Ledger
Check Fraud
Writing bad checks or altering checks to steal funds
Checks, which may be directed to friends, families, or for work related purposes, can often end up in a stranger's pockets. Through various cynical methods, scammers take the legal risks, and falsify the destination of checks.
Why is it so popular?
Check frauds are often committed by individuals, who are looking to quickly gain substantial cash. The check being a popular transfer method, and the ease of access makes them an palatable target for these individuals who believe they can evade detection.
Easy access: Because writing checks is a very common method of transferring, there are lots of opportunities for scammers to get their hands on one. Also, it is arguably easier to forge than any other payment documents.
Lack of consequences: Forging checks usually have a lower rate of detection compared to similar financial crimes. Also, investigations for these crimes have a shaky reputation, which may cause fraudsters to believe that they won't be reported.
Remaining anonymous: Scammers often operate from distance, meaning that they are often hard to track, especially when hiding their identities.
Low tech requirements: Check forging often doesn't require advanced technology, instead only requires computers/printers.
What are the consequences?
Although check frauds are often committed by individuals, there are various consequences of varying severity for different types of institutions.
Legal penalties: Forging checks of others, is explicitly a criminal offense, and can lead to fines and/or imprisonment.
Criminal records: Although committing check frauds can seem little, if caught, will remain in one's criminal records, and impact future opportunities in life.
Financial consequences: Criminals of such offense may be fined to pay back the stolen amounts.
For businesses: Although not as common, if businesses commit check frauds and get caught, additional administrative burdens will likely be added, as well as higher insurance premiums not covered by policies.
Why is it ineffective to detect check fraud?
Although law enforcement agencies, such as FBI, take initiative to detect check fraud, it has an widely known reputation of being ineffective.
Priorities: Law enforcement agencies often prioritize cases based on severity. Since check fraud is relatively insignificant to other financial crimes, it may not be considered as top priority.
Complexity: The nature of check frauds are that they are followed by an intricate system, meaning investigations can be a burden.
Public awareness: Some victims of check fraud may not report the case, partially due to the fact that its intricate process makes the investigation time consuming, and partially due to embarrassment as well.
How can you prevent it?
Preventing check frauds are often overlooked, but it will likely make a significant impact upon implementation. Preventing check frauds often require meticulousness and awareness.
Monitor bank statements: Regularly review bank statements, and report immediately if any discrepancy is found. It's not shameful to do so!
Verity checks: Before mailing the check, ensure that the check states the correct amount, and the correct payee.
Secure checks: Certain checks have watermarks, microprinting, and/or color-shifting inks. Make practice to use these "secure" checks to decrease the possibilities for a fraud to occur.
Limit sending physical checks: Although this is an extreme measure, if you are worried that checks are going to be frauded, limiting using physical checks, and using online payment methods more frequently is also a method.
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