Check Fraud

Separating Money from Worthless Paper

By Suzanne Mahadeo

Despite the heavy use of credit cards and online payments, and the redoubled efforts of the FBI and police anti-fraud units, check fraud continues to increase. CFEs can benefit from reviewing the rudiments of check fraud detection and prevention, and the new twists. 

Naomi, 21, an employee at a check-cashing business in Brooklyn, N.Y., received only the basics of detecting check fraud from her supervisors: look for watermarks, compare encoded check numbers and question customers to see if they can keep their stories straight if a check looks suspicious. (1) 

Earlier in the month, the main office of Naomi's business warned workers to look for a Roberta Kane who had been successfully passing false checks in other branches. When Roberta walked into Naomi's branch, Naomi closely examined her ID and the $200 check. The check's routing numbers were larger than they should be, the check felt softer than others, and there was no watermark. Naomi asked Roberta how she had received the check, and Roberta said it was a paycheck from her employer. Naomi called the number of the company that supposedly wrote the check. When the number appeared to be out of service, Naomi told Roberta that she had presented a false check and that the police would have to get involved. Roberta frantically ran for the door, leaving behind her fake check and ID.

While Naomi was able to keep Roberta from receiving more illegitimate funds, she didn't call the police because she wasn't sure if they'd handle such a miniscule case.

Even with the most basic knowledge of detecting check fraud, the neophyte fraud examiner Naomi was able to deter a thief. It's even more important for CFEs to review the rudiments of check fraud detection and prevention and the new twists plus know who to call in an investigation.

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