New Method of Check Fraud

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posted 9/2/2013 in Security & Fraud Information

This article provides awareness of a new method of check fraud.

Typical Check Fraud

A cashier’s check, money order, refund or any other type of check is sent to a victim (normally by mail). The victim is instructed to deposit/cash the check and send a certain percentage of the amount back to the sender via wire transfer, mail, cash card etc. The check turns out to be fraudulent and the victim, not the financial institution, is held accountable for the loss.

New Method of Check Fraud

A personal/business check is sent to a victim’s financial institution via US mail. The Financial institution that receives the check will make the deposit. Shortly thereafter, the subject will contact the victim and inform them that money has been deposited in their account as a refund, overpayment, sweepstakes, etc. The victims instructed to send a portion of the money back, similar to typical check fraud. Again, the victim is accountable for this loss.

This new method removes the chance the victim will simply throw the fraudulent check away when they receive it. By mailing the check directly to the financial institution and having it deposited into the victim’s account, there is a greater sense of legitimacy for the victim because they can see the money posting in their account. The subject knows the time frame it takes for the financial institution to realize the check is fraudulent after posting it to the victim’s account. This gives the subject a small window to make requests to the victim (typically 3-7 days).