check laundering and other types of check fraud (2023)

banking

11 minutes reading time | January 26, 2023

check laundering and other types of check fraud (1)

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check laundering and other types of check fraud (2)

check laundering and other types of check fraud (3)

ForRamsey solutions

It's your niece Georgie's birthday next week, so you get her outCheckbookjwrite a checkfor $30. Georgie lives in The Middle of Nowhere, Idaho, so put the check on a card and drop it in one of those locked blue mailboxes when you're walking the dog.

The next week you call Georgie on her special day and expect a sweet "Thank you!" But she says she never got her check. Then you look at your bank account and find that $9,000 is missing!

Obviously something fishy is going on here. The most likely scenario: someone stole your mail and committed check fraud by laundering your check (yes, that's a thing) and writing a new amount and recipient. Check fraud cases like this have skyrocketed recently, making it more important than ever to take safety precautions and learn how to avoid becoming a victim.

We talk about the most common ways criminals use checks to steal, so you can be on guardaremoney inareBank account.

What is check fraud?

Check fraud occurs when a suspect uses a check (personal or business) to steal money from individuals and businesses. Thieves steal millions of dollars every year this way.

The number of stolen checks being sold on the dark web (that's the bad side of town on the internet) tripled in just a few months of 2021, and it's still rising.1 Criminals can use checks to commit fraud in many ways, making check fraud investigations by banks, corporations, and law enforcement agencies tricky.

How does check fraud affect people today?

Although more and more people are choosing to do their banking digitally, check fraud seems to be accelerating. This is because, as outdated as it is, it works and criminals realize there is very little to stop it. And now, with new technology allowing you to cash a check with your smartphone, criminals don't even have to go to the bank to commit check fraud.

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People lose millions of dollars when thieves cash altered checks or use bad checks to buy things. But that is not all. Criminals also use information such as names and addresses from checks to steal people's identities. Then they can apply for loans, open credit card accounts, and wreak havoc.

Types of Check Fraud

Criminals are very creative when it comes to finding different ways to use checks to steal, so check fraud is not the same as check fraud. Many types of check fraud rely on float time (the amount of time between when a check is written and when the bank withdraws the money from your account). Others include fakes and chemicals. Here are some of the clever ways thieves use check fraud:

Check washing

Scene: A woman puts on a pair of rubber gloves and fills a small tub with nail polish remover. Check after stolen check, he dips them one by one into the acetone until all the writing has dissolved, then hangs them on the clothesline to dry. He then photographs the blank checks and posts them for sale on the dark web.

It's not your typical laundry day, but it's certainly expensive, costing Americans millions.

One way to keep your checks from being chemically altered is to use permanent ink pens.

stationery

In this type of scam, people intentionally write bad checks because they know they don't have the money in their account to cover them. Sometimes they open an account just for the sake of beautification.

These bad checks are often used to purchase goods or services. By the time the bank finds out the check is fake, the scammer is out of town and the business or individual who sold the goods is out of luck.

For example, imagine you are selling your cute Nintendo 64 and a box of old video games on Facebook Marketplace. Brad Pits texts you and says he "needs her lol". They arrange a meeting.

After reviewing them, Brad agrees to pay the price of $450 and asks if you have change. Brad says all he has is a check for $700. He hands you the check and lets you keep an extra $100 because you're kind enough to give him $150 in cash. Sounds like a deal! Besides, you already went to the trouble of taking off your pajamas to meet this guy. So you agree

To. Look, when you go to the bank to cash the check the next day, it bounces because Brad's check was wrong. Now you're out of $150jYou can't play Mario Kart 64!

The only way to really avoid bad checks is to not accept personal checks from people you don't know. If you're selling an expensive item like a car where cash doesn't make much sense, you can require the buyer to pay with agiro post, which is like a prepaid check. buy andfill out a payment orderIt's easy and next to nothing, so don't feel bad if you insist.

The only problem you might run into is that money orders are limited to $1,000. So the buyer may need to order several. Also, keep in mind that fake money orders are also a problem, but you can call the company that issued them to make sure they're real.

Another option is a cashier's draft, which comes in two forms: a certified check and a cashier's draft. However, with a certified check, your personal information is on the check, which is a bad option if you're the one paying. For a bank check, be sure to verify the check by calling the bank that issued it (look up the phone number yourself, don't trust the number on the check). Also, both options are more expensive than a money order.

check kites

This version of check fraud is based on float time. Using two separate bank accounts, a thief writes a check from one account to the other. This creates an incorrect bank account balance, making Account 2 appear to have money when it doesn't. They will then write a second check from Account 2 to Account 1 for the same amount so Account 1 will also appear to have money and the first check will be cashed (they do this to avoid the fee generated when a check goes back). . If you do this over and over again, it saysdragon.

Checkkiting doesn't always result in theft, but it's still illegal. Some people do this to keep a check from bouncing and stay afloat until their paycheck matches the original check. Others withdraw cash and flee.

pending check

This is the linchpin of many other scams. It's easy when a thief writes a bad check and relies on the time lag between the time the check is written and the recipient's attempt to cash it. During this time, they seem to have money in their checking account, allowing them to write more bad checks or even withdraw the money.

Check forgery

This is a classic. A bad boy (or girl, we're not chauvinists) gets a check (let's assume it was stolen) and hits a fake version of the John Hancock of the check's actual owner. Let's face it, bank employees aren't handwriting forensic scientists; You probably won't be able to tell if the signature on the cashed check is real or forged. So the scammers walk away with a big wad of cash.

Another type of forgery is to forge the note and then impersonate that person at the bank and cash it. Or sometimes the scammer tries to convince the victim to give them cash in exchange for an endorsed check.

Don't make it easy for thieves to rob you with fakes. If you're depositing a check through mobile banking, or throwing away a canceled or unused check, be sure to writefileon the front and tear open for more measurements.

check theft

Check theft plays a significant role in many of the types of fraud discussed, including check laundering and forgery.

Post boxes, especially the big blue ones on street corners, are a prime target for thieves looking for checks. Thieves steal USPS employees' mailbox keys and empty mailboxes. Can you imagine your sweet old postman getting stopped for his keys? It's the wild Midwest and your dead end could be next. Keys sold on the dark web cost up to $7,000!2

To avoid having your checks stolen in the mail, take them directly to the post office; Don't leave them in the blue boxes or in your personal mailbox. Check your mailbox regularly and do not leave incoming mail in the mailbox overnight.

Another similar scam is check forgery, where criminals steal an account number and use it to print fake checks. Then they have a whole stack of checks to write you:Pay on my order.

office work

In an account takeover, a thief gains access to your bank account and begins writing checks. It's actually a form of identity theft. Criminals can access your account through online portals or even go into a bank branch and impersonate you. And writing checks from your account isn't the only thing they can do at this point, so be careful.

Another type of check fraud involving identity theft occurs when someone gets your personal information and opens a fake bank account (well, technically it's real, but it's not yours) and writes bad checks to the account in your name.

There are many steps you can take to make your bank account safer and more securePrevent Identity Theft, including choosing a secure password and changing it frequently.

Post return

Technical,Post returnit happens whenever US mail is used for criminal activity. In case you don't see muchLaw, which is the all-time favorite of prosecutors. (Did the defendant embezzle $1.3 million? Did he mail a bank statement in the process? Mail fraud! We got him!)

What you have to worry about is whenareThe mail or mailbox has been tampered with.

For example, criminals send fake sweepstakes or lottery ads with the exclamation:won!All you have to do to receive your prize is provide some personal information and send some money to cover shipping and handling, handling and taxes. The crooks then keep your money and never send any prize. And in some cases, they use the account numbers on your check to steal more of your hard-earned cash.

Chain letters asking for money are another form of mail fraud. Mail theft is also a big problem: thieves steal your mail hoping to find checks.

Checks aren't the only thing thieves look for in your mail. If you recently applied for a new debit card and it is found first,Bote. You can write down all the numbers and reseal them so you don't realize you're a victim ofdebit card frauduntil they've already bought a boat, a 1,000-inch TV, and a billion special-edition Nikes.

mailbox fishing

No, you don't throw your line into the lake here hoping to catch a big metal box with a flag on it. This is the term for when thieves steal mail from USPS Blue Boxes by searching the mail slot instead of using a key. In this case, if you give a man a fish, he will eat it for a day. If you teach a man to fish, he will be a criminal for life. Don't have a card to pay for that new Gucci bag? Go fishing! (Just kidding. Please don't go fishing.)

protect yourself

There are things you can do to make your checks and mail more secure, such as: by dropping them off directly at the postman, but at the end of the day, once the envelope leaves your hands, it's out of your control.

It's a little scary, we know. However, having a strong identity theft protection plan in place can go a long way in ensuring that your sensitive data, documents, and checks are safe and secure.

We recommend RamseyTrusted provider Zander Insurance for identity theft coverage. Their plan works hard to protect you from identity thieves, and if anything happens, they have your back. zander:

  • Monitor your information in real time and warn of risks
  • Provide you with full-service identity recovery services if you need them (they will clean up all the mess for you!)
  • Recover up to $1 million in stolen funds (including attorney fees)

To verifyZander protection plan against identity theftHallo!

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Since 1992, Ramsey Solutions has been committed to helping people regain control of their money, build wealth, improve their leadership skills and improve their lives through personal development. Millions of people have taken our financial advice in 22 books published (including 12 national bestsellers) by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have more than 17 million listeners weekly.Learn more.

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