Check Fraud Is Alive, Well, And Preventable

Old-fashioned check fraud is coming back into style as banks tailor their anti-fraud efforts to safeguard internet commerce. Check fraud cost banks almost $1 billion in 2005. The LA Times took the time to test the effectiveness of one resurgent scheme, check washing:

In a test at The Times — following directions supplied by a local security expert — the writing in the “Pay to the Order,” “Dollars” and signature areas on a check was dissolved in less than 15 minutes. Printed information — including the bank routing numbers and the name and address of the account holder — remained intact.

Half an hour later, the test check was dry enough for new information to be filled in. It was a bit crumpled, as if it had gotten wet from rain or sat in someone’s pocket. But it looked disturbingly good.

If someone washes and cashes one of your checks, you are not liable for the deducted amount. If the washer is not found, the bank eats the loss.

To prevent check washing, do not write checks using ballpoint pens. Instead, use a pen with secure ink that won’t dissolve, like the $2.00 Uni-ball 207. For the ultimate in check fraud prevention, pay with cash. — CAREY GREENBERG-BERGER

Check please, thieves say [LA Times]
(Photo: Daquella Manera)

Comments

Edit Your Comment

  1. gwong says:

    I never thought I’d see “Helps prevent check washing” be a pen’s big selling point. That’s a pretty nifty pen.

  2. Felix the Cat says:

    That system is so out of date it has moss on its north side.

    Today you just go to an office supply store and buy a $14.99 software package for making up your own checks. They even supply an initial batch of check paper, 3 checks per sheet.

    You just type in the info you want to print on the checks, including the Bank name/address and the account and routing numbers. Then you go to your local store etc and give them the check, of course if you plan ahead you can find some discarded check and use a ‘real’ bank account number and the funds will be taken out of that account, this may delay ‘discovery’ until the person informs his bank that he did not write a check to the ABC Store or whereever you wrote the check.

    You don’t have to actually go to some store to write a check in person, you can shop by mail using dud checks (or real if you get hold of an actual working account number) and have merchandise sent to you at a POB or local UPS/Mail Boxes Etc store.

    Happy Shopping!

  3. Nytmare says:

    Why dissolve the signature area? Isn’t that the one field a thief would want to leave intact?

  4. alhypo says:

    I’ll write checks with whatever pen the bank supplies me. I guess it is their loss if they continue to distribute those substandard ballpoint pens that barely hold together under the stress of their own springs.

    I cringe at the thought of paying $2.00 for a pen, and since I’m not responsible for the fraudulent checks there is really very little incentive for me to buy one.

  5. spanky says:

    Writing with a ballpoint pen is like writing with a stick full of oily poop. If you use ballpoint pens, you deserve to get all your money stolen!

  6. Lee Jones says:

    How about computer checks? We print checks from our HP inkjet printer.

  7. timmus says:

    Why bother with check washing? Once you have the ABA and account number, which are right there on the check, you can jump online and start buying stuff. I got ripped off that way several years ago, thanks to shitty processors like CCBill, iBill, Verotel, and DHDMedia that let any idiot with an ABA & account # start charging stuff.

    And as the posters above have stated, there’s ways to print blank checks from scratch.

  8. IRSistherootofallevil says:

    And it costs us $2.3 TRILLION AND our civil rights to keep that imbecile George Bush around.

    Anyways yeah boohoo big banking lost a billion dollars…big deal. They make a billion in a good day of trading.

  9. IRSistherootofallevil says:

    Uh don’t even order checks. I just pay my credit card bills online.

  10. VA_White says:

    I pay 99.9% of my bills online but I still write about six paper checks a month. Sometimes only a paper check will do. Four or so are written to my daycare provider who likes to be paid weekly, on Fridays, and not in cash. She does not take credit cards. I tried to get her to accept monthly or semi-monthly checks written through bill pay but that’s not how she operates. We adore her so we do what she asks. The other two checks are written to the pizza man.

    I can order any pens I want through work so maybe I will order a box of the Uni-ball ones. I don’t know if I can sneak a box of expensive pens under the radar but all the receptionist can say is no, right?

  11. shdwsclan says:

    Ha
    Paying your credit card bills online is just as open to fraud as writing checks with regular ink….

    Let me ask you….
    Do you use a wireless network ?
    Do you use windows or mac os when you pay your bills?
    Is your computer directly connected to the internet [no router] ?
    Do you have UPnP turned on in your router if you have one ?
    Do you have any sort of p2p app installed ?
    Does your bank use only 128 bit encryption provided in real time when you log in[the gold lock at the bottom of the screen] ?
    Is your keyboard wireless…clunky mac bluetooth keyboard or ms/logic thing..?
    Do you live in an apartment ?

    Well, if you answered yes to any of these questions, then you may already be a victom of ID theft.

    Wifi networks are crackable, and even the data traveling between the AP and the computer can be intercepted and decoded. Each time something is transmitted, so is part of the key….oh, yeah…and AOSS is a joke..Also, you think setting up mac addresses of allowable comps on the router….ha…mac addresses can be found by scanning the air and then duplicating mac addresses.

    Windows and mac have closed source portions, which means that there is a delay between the use of a hack and its patch…significantly. Mac is a little faster since all they have to do is knock off bsd code in their open source darwin section. Mach is another story….

    If you have no router, your comp is very succeptable to a an attack. A router of any sort actually stops 90% of all attacks….

    If UPnP is turned on, that means the router can configure itself automatically, especially if someone is accessing your network that shouldnt be…especially on wireless….you dont even need a password to get into the router…..

    P2p apps have security holes….and also, i wonder why many people cant figure out why they are FREE???

    If you bank has only 128 bit encryption provided in real time when you log in, then they really dont care about security…..since the key HAS to be transmitted before there is any encrytion. And as with all transmissions….they can be intercepted.
    If they really care, they should give you a CD with a specially generated 1024 bit key that you pick up and you use on your end, so the key is never transmitted and encryptions…is actually encryption….ssh uses this already…

    You can dump wireless, signal….so i think i mentioned before…you can dump any wireless stream….even bluetooth and some private oem bands used by ms and logitech. Yes…i know about PIMs that you have to enter some 4 digit code, but these are weak…

    Oh, yeah……
    Apartments…. your probably wondering about that one….
    Well, keyloggers people…keyloggers, they are small, hard to detect, especially the hardware kind, where they are actually inside the keyboard or attached to it…and they can actually transmit over private radio…
    Landlords have keys….

    So as you can see, paying online is alot worse…..
    For those keyloggers, they are programmable keyboards where you can change the internal keymap and change the comps keymap, and it allow switchback for legacy compatability…

    But then again….you really dont need security if you have close to nothing in your account…

  12. FLConsumer says:

    Another alternative is something like ING’s Electric Orange, where there is no check, just an e-mail prompting the person to enter THEIR bank’s routing number and THEIR account number.

  13. AndyFromTucson says:

    @shdwsclan: You know, rather than make sure my transactions are kept secret using NSA grade security measures I think I will just keep an eye on my bank account and credit card account and promptly report all fraudulent transactions to my bank. The way I understand the rules, this should be effective to protect me from financial losses.

  14. MarkMadsen'sDanceInstructor says:

    I think everyone hear is missing a key point about the bank eating the loss of the fraudulent check. Banks only have to eat the loss if you notice the fraud and report it within the right amount of time. If you have two checks that are washed, the second being more than 30 days after the statement period of the first check, the bank can assert a “Failure to Inspect” defense under the UCC completely limiting its liability for the second check. Thus, you would be the one eating the loss, not the bank.

    If you wait too long to report the first check, you might also waive your ability to recover from the bank for that check as well.

  15. But banks don’t really “eat the loss” do they? Wouldn’t they just increase other fees to cover the losses from fraud?

  16. Charybdis says:

    Get the word directly from the man himself. This is definitely someone who knows about fraud and identity theft, and should be required reading by everyone old enough to handle money.

    http://www.safechecks.com/bulletin.htm

  17. mac-phisto says:

    in most cases, the bank that received that check as a deposit takes the loss, not your bank. as long as the fraud is discovered within a specific time period (generally 60 days), the fraudulent check can be returned & debited from the account of the check depositor. if that account has been closed, or the account holder has taken off, the bank becomes responsible for recovering their loss.

    this is where check fraud can really hurt: accepting a fraudulent check from a third party & then depositing it in your institution makes you financially liable for the payment device. therefore, you are out whatever monies were obtained fraudulently. obviously you can pursue the normal legal channels to recover your money, but there’s a good chance that if someone is paying you w/ a fake instrument, you’re pretty screwed. a bank is not legally liable for fraudulent items that you present for deposit.