Fraud and Crimes: Check-Related Theft
Check fraud may seem like a minor crime compared to more violent crimes like rape or murder, but it is one of the fastest growing crimes in the country. Check fraud, though many people believe its effects are limited to a small number of people, actually impacts every financial institution and person because as check fraud increases, the costs of prevention increase, which means consumers pay more. Another effect of check fraud is that it is making it more difficult for law-abiding citizens to manage their finances and complete basic tasks involving money because of the extensive security measures that are being implemented to help stop the fraud.
Check Fraud: Two Common Examples
Check fraud cannot be simply defined because there are many different ways of accomplishing it. In all cases, however, check fraud is essentially the stealing of money from someone or from his or her account. Because checks are such a common form of payment and have been around for so long, many people do not scrutinize or examine them as closely as they used to--or as closely as they should--and so it is easy to create minor changes on a check that allows a thief to obtain someone else's money.
One of the most common methods of check fraud is forging signatures. This fraud generally occurs when people have access to someone else's checks--whether they are personal checks or business checks--which they use to write checks to themselves and then forge the account holder's signature. This is an easy method of check fraud because the check signatures are rarely checked against the signature cards that banks have on file, and even if they are, people with access to the checks probably also have access to copies of the account holder's signature that they can copy.
Another similar technique is forged endorsements. In this kind of fraud, the thief somehow gains access to a check that is written to someone else and signed by the account holder. In some cases, the checks are joint party checks from the accounts of marital partners (many times who are in the divorce or separation process) or in other cases the checks are made out to multiple recipients, all of whom should endorse the check before depositing or cashing. These fradulently endorsed checks are usually then deposited into the bank accounts of the thief. Although these are only two of the many ways to accomplish check fraud, they clearly reveal how easy it is to fall victim to this growing trend. To protect against check fraud, it is important that checks be guarded and that only trusted people are allowed access. Many banks are now working to institute more effective secure measures to better protect their clients and the money stored in their accounts.