Scammers Want to Know if You are Paying People by Check

Scammers Want to Know if You are Paying People by Check – by Carl Vonderau.

Are you paying with checks? I still do because I like the physical record. Or  maybe you’re sending checks to your kids at Christmas. Watch out! Scammers steal the checks, alter them and deposit the checks with new amounts. Then they withdraw the money before the bank where they’d deposited discovers the fraud.

Why does this work? Because banks routinely make the money available before fully verifying the checks are valid. The fraud is so blatant the fraudsters post tips on Telegram channels and Reddit. As a result, some banks like Fidelity and JP Morgan Chase are placing longer holds on checks deposited with them.

Other countries like France and Britain hardly use checks anymore. But that hasn’t happened in the U.S. In 2021 the average person wrote 30 checks per year. That’s catnip for scammers. They steal them from mailboxes, which is why the postoffice Dropbox’s have more antitheft hardware now. To overcome that defense, the fraudsters rob mail carriers and steal their arrow keys that open the mailboxes they collect from. Thieves also buy books of blank checks.

So what does a scammer do once he has your check? They use household chemicals like acetone or nail polish remover to wash out the amount and beneficiary name on the check. Or they “cook” new checks by scanning the old ones and changing them. They write in a higher amount and the name they plan to access. Then he or she goes to an ATM (disguised so the ATM camera can’t get a good image) or does a mobile deposit. Some scammers advertise and sell the checks. Or they purchase bank accounts in which to deposit them.

Federal rules say that banks must challenge a check’s validity within seven business days or release the funds. Nevertheless, some banks let the depositors immediately use the funds. I don’t think they manually verify checks anymore unless the amount is very large or there is a problem that their software has identified. Maybe the software can catch that the the check contains handwriting from two people?

But most of the frauds are caught when the bank it is drawn on discovers there are insufficient funds in the account. That drawee bank has 60 days to respond to the bank in which the check was deposited. That’s plenty of time for the fraudster to withdraw the funds from the bank where the check was deposited..

Fidelity allowed clients to deposit a check and immediately withdraw the funds. The fraud is so rampant that they now require a hold of 16 days for some depositing customers. No one wants to wait that long to use the money. If it was me, I’d ask for the person that had written the check to pay me via Venmo or Paypal.

And if your check was stolen? You notify your bank, of course. The problem is that they may then freeze your account. It can take weeks of correspondence to get your problem resolved.  So how do you pay your bills while that is going on? It’a a problem for your bank too. It takes their employees a lot of time to do the investigation.

So who ends up eating the loss from the fraud? It’s the bank most liable for not catching the fraud. That takes time to determine.

Be careful when you write checks. For large checks, I manually deposit them at the post office.

 

 

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