Tag Archive for Cheque fraud

How to Avoid Becoming a Victim of Cheque Fraud – Part 2

Despite the widespread use of other payment methods, cheques still remain in use.  According to Statistics by the Canadian Bankers Association, Canadian financial institutions still process approximately one billion cheques every year.

Cheque fraud can occur in two different ways. They can either be stolen or fraudsters can make changes to them.  You need to not only protect your cheques from being misused but also from being given one of these fraudulent cheques.

Financial institutions have their own measures to detect if a cheque is fraudulent or not.  However, the common man may not have access to the tools that they have.  However, there are still certain ways in which you can detect whether you have been given a fraudulent cheque.

Most Canadian banks have certain security features built into their cheques such as watermarks or specific designs. These are generally printed on the back of the cheque. If the cheque you’ve been given is not original and has been scanned or photocopied, these intricate designs or watermarks will not be there.  This is one way that you could identify that the cheque is forged.

If you’ve been given a money order or a bank draft and you have certain doubts about their originality, it is always a good idea to call the bank that has issued the cheque to make sure it is genuine and the funds will be released once you deposit it. In addition, there are some basic precautions that should always be taken when writing or receiving cheques.  Always ensure they are properly dated and fully completed; if you see even minor signs of any alteration, do not accept such cheques; avoid accepting post-dated cheques; if a cheque was originally made out to someone else an then signed over to you, do not accept it; do not accept counter cheques.

Be wary of Cashier’s Cheque Fraud.  A large number of people assume that a cashier’s cheque is as good as cash.  That is not always the case.  Sometimes buyers make out a cashier’s cheque in excess of the purchase price of the product.  The buyer then asks the seller to pay him back the extra money.  This is an example of a cheque overpayment scam.  These could be done either through a lottery, auction or secret shopping offers.  You might end up realizing that the overpaid cheque that you deposit is a fake and although the funds may be registered immediately, once the cheque is actually processed, your bank will determine that it is fake.   You will then have to bear the penalty as well as the loss of any funds that you may have wired to the buyer for the amount that he had initially overpaid.

Overall, simple yet effective precautionary measures can help you minimize the chances of becoming a victim of cheque fraud.


How to Prevent Cheque Fraud – Part 1

Cheque fraud is one of the biggest challenges that are faced by financial institutions.  It is among the fastest growing crimes in the financial world.  It is being forecasted that cheque fraud will continue to grow by approximately 25% annually and will cause businesses in North America to lose more than $20 billion annually. The most common types of cheque fraud include counterfeiting, forgery and alteration of cheques.

With the constant advancement in technology, criminals have devised new ways to deceive their victims. These include counterfeiting of cheques as well as chemical alteration.  Cheques are often duplicated through the use of computer software and high-grade laser printers as well as sophisticated photocopiers.  Criminals also use chemicals such as bleach, brake fluid or acetone to modify cheques. Another form of cheque fraud is through paperhanging.  This is done by writing cheques on closed accounts or by reordering cheques on these closed accounts. Cheque Kiting refers to the fraudulent act of opening two or more accounts and misusing the float time to create balances that don’t actually exist.  This is also referred to as cheque washing.

The most common victims of cheque fraud are financial institutions and consumers.  There are several ways criminals can get access to your cheques. They can either steal it from your home or your car; they can pick up a canceled cheque or an old cheque that you may have discarded; or they can remove a cheque that you may have mailed to pay a bill.

While criminals use technology for cheque fraud, the same technology can be used to prevent this fraud. For example, the use of Magnetic Ink Character Recognition (MICR) ensures that the sorter is unable to read a cheque that is counterfeit.  Encryption is another technology that can help prevent cheque fraud.  Cheques are printed with a code that is not visible to the naked eye but can be used to verify the validity of a cheque when it’s scanned or copied.  The use of pantographs is also a useful strategy to prevent fraud.

Consumers can protect themselves from cheque fraud by taking certain precautionary measures.  Cheques should always be kept in a secure location.  Cheque books should not be left in cars or briefcases. Any unused cheques from closed accounts should be destroyed immediately.  If cheques are to be reordered, they should be ordered in a continuous set of serial numbers.  One set of cheques should be ordered per account.  If for some reason there is a transaction on your account that you are not aware of, it is best to report it immediately.

It is also a good idea to endorse your cheques by your financial institution.  Do not give your account number to anyone, unless and until you know for sure why the information is being requested and by whom.  It is also advisable to reconcile your bank statements on a regular basis.  When writing crossed cheques, mark them as not transferable.  If there is a risk of fraud in certain situations, use cash, card or online banking.  Avoid using cash cheques.  Never ever sign blank cheques.  Avoid posting cheques.

Consumers should opt for cheques that offer security features.  Today, many companies offer cheques that employ security features to prevent cheque fraud.  These companies use tightly controlled cheque printing procedures.  The use of magnetic toners has also prevented criminals from printing cheques at home since this method is more expensive and difficult.  Financial institutions also ensure that no unauthorized cheques are cleared unless and until the bank has been notified.

ChequesPlus.com provides its customers with cheques that feature multiple security features in order to minimize the risk of fraud and misuse.  They provide cheques for both Canadian and US accounts and all cheques provided by Cheques Plus include security features such as Microprint and pantographs to prevent fraud.

There is no doubt that dealing with cheque fraud is a challenge for both consumers and financial institutions. However, employing certain precautionary measures and using cheques that have built-in security measures can help minimize the risk of such fraud.  The second part of this article will talk about how you can prevent receiving fraudulent cheques and the measures that you can use to ensure you do not become a victim of such fraudulent activities.

Fake Brock Cheques Used In Bank Scam

Credit: stcatharinesstandard.ca

Dan Dakin

By Dan Dakin, St. Catharines Standard

It’s his first week on the job, but Brock University’s new head of finance has already had to deal with a money emergency involving corporate identity theft.

Brian Hutchings, the school’s vice-president for finance and administration, was alerted Wednesday that the school’s name was being used for a fraudulent cheque-cashing scheme.

Police say someone made fake cheques using the Brock logo and the number of its public bank account used by students to pay their tuition.

The person running the scam set up an ad on an online classified website looking for secret shoppers for a fake Brock-led customer service study of a major retail outlet and a money transfer service.

The victims were sent a counterfeit Brock cheque and then were asked to wire money to the alleged scam artist. In every case, however, the cheque bounced and the victims are left owing the bank the amount they sent.

“There are numerous scams like this out there,” said Niagara Regional Police Det. Sgt. Paul Spiridi. “Most involve the cashing of cheques for one reason or another and forwarding cash by money transfer to another party. Money transfer services are meant to transfer cash between people who know each other. They aren’t to be used as a means of commerce.”

Hutchings said Brock didn’t lose any money in the scam, but called police Wednesday as soon as they were alerted by the bank.

“The cheques were so poorly done the banks flagged it right away,” Hutchings said. “We feel bad for the (victims) because they lost money through this scam. That’s why we went public, to make sure no one else gets scammed.”

Hutchings said the school was already in the process of getting set up with payee match, a system where banks electronically match up any Brock cheques to one they know is legit before ever depositing the money.

“If they don’t match, the bank pulls it and says someone is trying to forge a cheque,” he said.

But that’s little consolation to the nearly 30 people police believe may have fallen victim to the scam. Fake cheques worth between $1,950 and $2,950 were found as far away as Calgary and Newfoundland.

Police say the fake cheques can be identified because they have the address of a bank in Toronto rather than one in St. Catharines.

Anyone who received or cashed one of the fake cheques is asked to call the NRP at 905-688-4111 and refer to incident number 12-99589.

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