Checks Stolen? Maybe Leave The Account Open, Otherwise The Bank Won't Help You With The Hot Checks

Boom: I read your article about BOA and the identity theft today.
Boom: My parents had their check book stolen once. (by my sister but that’s another story)
Boom: They decided to close the account and move the money to another account.
Boom: Banks are usually accountable if they accept fraudulent checks but if the account is closed they are no longer accountable for all the bad written checks. Moral of the story – if you check book is stolen don’t close the account or you will be held accountable for the bad checks.
Boom: It caused my parents tons of money in lawyers to ward off the companies coming after the hot checks
Boom:when the account is closed they no longer accept the checks but the companies who were given the hot checks are still out $$
Benpopken: Isn’t the paper hanger responsible?
Boom: Tell that to companies like Pizza Hut and Papa Johns
Boom: who accepts checks at the door without verifying anything
Boom: they get angry and they sent many letters…

(Photo: Betsssssy)


Boom: well the best thing would have been for my parents to keep the account open
Boom: because the bank would have to make up for the checks being frauds
Benpopken: really? that’s interesting and counter-intuitive. In fact, it goes against everything I’ve ever heard.
Boom: very much so but when explained you can understand how the bank would be hands off when the account is closed
Boom: you lose the help you get from the bank in fraud investigation
Boom: When the account is open the bank would send NSF info to my parents – my parents were able to take that to the court and refute the check was not theirs.
Boom: When the account was closed the bank just refused the info and my parents never got any information to go to the court about the checks
Boom: My parents didn’t know what checks had bounced and who those checks were made out to
Benpopken: so how did you guys stop the check writer? police sting?
Benpopken: when did they find out it was your sister?
Boom: they tracked how and when the checks were written
Boom: found one place where she bought some audio stuff for her car and they met her when she came to pick up the car
Benpopken: they being your parents?
Boom: police
Benpopken: ah
Boom: sadly enough the judge was WAY TOO easy on her – she had problems with drugs, and had written hot checks before
Boom: she spent one night in jail and had to take a class about check writing
Benpopken: proly coulda used a good hard lesson
Boom: and I am sure a good amount of community service
Boom: since then my parents are raising her 2 children
Boom: hard – I am one of 5 children and my parents only had 1 bad one :-p
Boom: goes back to nature or nurture questions
Benpopken: so they really had to use lawyers? they couldn’t just send a letter that said hey, someone stole our checkbook?
Boom: well they sent the first letters by themselves – It must be because of the large amount lost due to the checks
Boom: they were getting hassled and they didn’t want to have credit problems
Benpopken: then the companies said we don’t care, we’re going to sue you?
Boom: my parents worked harder to cut them off at the pass
Boom: got the lawyer involved to show them they were serious about it before there were even more problems happening
Benpopken: ah i see
Boom: smart idea – better safe then sorry if they actually had to go to court the costs would have been 10x
Benpopken: guess so
Benpopken: unfortunate costs, on many fronts
Benpopken: What bank was this?
Boom: it was a credit union
Benpopken: do you remember which credit union?
Boom: shell federal
Boom: but I would bet national chains would be just a hands off with closed accounts
Boom: I think the best thing is to warn people about the possibility
Boom: closing the account may be the best thing in some situations… but people should think about what they are doing before they just close the account – remember that an open account provides bank protection
Benpopken: right, as long as you realize that until the perp is caught, you just have to weather the storm of bounced checks and whatnot
Benpopken: and a month later, the money will be back
Benpopken: in the meantime, take all money out of the account and open a new one
Benpopken: and put your money there
Boom: yeah, that would be best – leave the account open but move the money out
Boom: have the bank reject all checks
Benpopken: and call the cops

Leaving your account open seems rather odd, but apparently it leaves you less open to liability??

So, by this advice, when your checkbook is stolen:

Report the fraudulent activity to the bank.
Ask the bank to freeze your account. Tell them which checks you still have outstanding, so they know to let those pass
Remove all remaining funds, minus the amount for any outstanding checks, and put them in a new account in a new bank.
File a police report.

If you do all this quickly, everything should clear in your favor, eventually. — BEN POPKEN

Comments

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  1. dragonflight says:

    Oh the great liability legacies that checks leave us…

    At least credit cards are clearly defined regarding theft and can be set up to be rejected, but stolen checks seem like a bigger hassle than losing your entire wallet. Good thing I don’t carry/use checks unless I have a specific need to do so.

  2. Juliekins says:

    You know, my sister had her checkbook stolen a few years ago. She filed a police report and closed the account. She never had to hire a lawyer, but I do remember her having to get a new affidavit of fraud from the police every time the thieves passed another one of her checks. IIRC, the bank was great to work with, but the collection agencies that stores sent her bogus checks to were total a-holes.

    She and my parents (she was in college at the time) were tenacious about documenting phone calls, following up with law enforcement, etc and her credit was not impacted.

    I will e-mail this to her and ask her to comment, but the advice to leave the compromised account open doesn’t seem right to me.

  3. dohtem says:

    I am wondering about the whole moving funds into a new account. What of the BofA story from a couple of days ago where the bank pulled funds from his new account to honor a stolen check written on his old account?

    I guess a new account with a completely new bank might work.

    This story also reminds me of how debt collectors (amongst others) use the account info on a personal check you send them to print more personal checks without your consent and cash them and the banks let them.

  4. superlayne says:

    Checks seem like a worse idea every post. I think I’ll just keep all my cash in a bucket and bury it in my backyard.

    As long as no one else has a shovel…

  5. mgiampapa says:

    Ok, this is just silly… This is why you can cancel checks when they are stolen. Big evil BoA did this for free for me when my car was broken into and a checkbook stolen (among other things).

    Once a check is canceled you are not liable in any way unless you are trying to use them. Then it’s still fraud any way its cut.

  6. Alexander says:

    This country is about to get rid of analog TV signals and yet we still have to deal with checks? Luckily I haven’t had to write a check in over 5 years. Everything is debit or credit. I’d pay my rent with debit too if they’d let me. Instead I get a money order every month. VHS, tapes, floppies and checks all need to go away! ;)

  7. humphrmi says:

    I see the problem here. In theory, by closing the account you are eliminating your loss and the remaining issue of check theft and fraud are police issues that you needn’t be (terribly) concerned about – they’ll either chase down the thief or they wouldn’t have either way.

    But then you’re left with all those folks who took the checks.

    And, in fact, even if you don’t have checks, you are still technically subject to this problem. Someone getting their hands on your name and account number can create MICR encoded checks in your name and present them for payment. You’ll still have the companies that took them coming after you.

    I used to collect bad checks for Domino’s. This happened every once in a while. When someone said “Hey, those checks were stolen” I’d say “OK, just send me a copy of the police report.” This achieves two things: One, it confirms that some deadbeat isn’t just claiming that the check they wrote you for pizza was stolen. Second, it allows the business owner to contact police and alert them that a check came through in an active fraud case.

    But I guess there are jerks out there who won’t take police reports as evidence that they are just as much a victim as the person named on the check. For that, there’s nothing you can do. Just offer to fax them the police report and if they still persist give them the police report number and phone number for the local police station and then politely but firmly insist that you are done talking about it any further, and hang up.

  8. kidnextdoor says:

    I think it’s damned if you do, damned if you don’t…
    I had a checkbook stolen, but instead of closing the account, I had the stolen series of checks canceled. Didn’t stop anyone from using them. Some lowlife used one of the stolen checks at Old Chicago, and when OC cashed it and found out it was canceled they sent it to a collection agency.
    Of course, this is back when acid wash jeans and Winger was popular. With debit cards and auto bill pay…who needs checks???

  9. Seth_Went_to_the_Bank says:

    “If your checkbook is stolen don’t close the account or you will be held accountable for the bad checks.”

    What???? Who is this Boom guy? He has NO CLUE what’s he talking about. Take note that Boom’s family never actually did what he’s advising.

    “Well the best thing would have been for my parents to keep the account open because the bank would have to make up for the checks being frauds.”

    WRONG. In fact, if you report your checkbook lost, no bank in their right mind is going to keep the account open. AND if you somehow insisted, THAT would actually open you to potential liability for the stolen checks.

    One thing that IS true, is that most banks are reluctant to block an entire book of checks. That is, if you lost 1 blank, that’s one thing. They won’t keep your account open for 50 checks.

    I understand what he’s saying about when you lose a checkbook and the merchants who made receive bad checks, but that’s a criminal. Ya know what, I don’t even know how much of this story makes any sense at all, because all you’d have to do is show the merchants a copy of the police report. It’s true some companies are obtuse, but this story sounds like it is a childhood memory with a lot of details and urban tales mixed in.

  10. Seth_Went_to_the_Bank says:

    Edit:

    I understand what he’s saying about when you lose a checkbook and the merchants still receive bad checks, but that’s a criminal matter. Ya know what, I don’t even know how much of this story makes any sense at all, because all you’d have to do is show the merchants a copy of the police report. It’s true some companies are obtuse, but this story sounds like it is a childhood memory with a lot of details and urban tales mixed in.

  11. FLConsumer says:

    @alexander:

    This country is about to get rid of analog TV signals and yet we still have to deal with checks? Luckily I haven’t had to write a check in over 5 years. Everything is debit or credit. I’d pay my rent with debit too if they’d let me. Instead I get a money order every month. VHS, tapes, floppies and checks all need to go away! ;)

    I think ING Direct’s Electric Orange is the closest thing I’ve seen to eliminating checks… but there still are quite a few times where even they resort to paper checks.

    Just curious, how do other countries handle this? I’m under the impression that checks aren’t a uniquely American phenomenon, but that we have the highest usage of them.

  12. TWinter says:

    @FLConsumer:
    I lived in Germany back in the 90s and checks were almost unheard of, everything was done with electronic funds transfers. Interestingly this system requires people to hand out their bank account numbers to others and everyone does this quite happily because the only thing you can do when you have someone’s bank account info is pay money into their account.

    The German banks did have some sort of check that was available to better customers, but those were only valid in combination with a debit/ATM card and they had to run the debit card through the system before they would take the check. I never quite saw the point of the whole mess, but I think the checks were valid for amounts larger than you could run on the debit/ATM card – I only ever saw them used when people were buying expensive stuff. I had a restricted account because I was on a student visa and my bank didn’t give me checks or even an ATM card that would work at anything other than a branch of my own bank.

  13. lore says:

    Interesting timing. Here’s an article on MSNBC Red Tape about identity theft. Her issue? Her bank, Bank of America, kept the account open and allowed the thief to continue withdrawing money from her account every time she refilled it.

    http://redtape.msnbc.com/2007/05/id_thief_bounce.html

    An excerpt:
    “As soon as I put money in, he was able to take it out,” she said. “I kept asking why they couldn’t just close the account.” The answer: Accounts that have a negative balance can’t be closed.

    Reiss, the Bank of America spokeswoman, said it is not the bank’s policy to tell consumers to leave their accounts open when identity theft occurs; instead, the bank works with consumers individually to develop the best course of action. Consumers are generally instructed to let the bank know about any pending transactions so they can be appropriately flagged and don’t cause additional bank fees. Sometimes, consumers are instructed to open a new replacement account, and pending transactions are redirected to that account. She could not answer questions about why Poor’s case wasn’t handled that way because she said she couldn’t reveal any information about an individual consumer.

  14. brettt says:

    don’t use checks. with the advent of ATMs, you can actually touch your money if you can’t use debit or credit. checks are totally obsolete, and clearly dangerous. anything that takes a week to be verified is just asking for trouble for all parties involved, and there’s just never a use for it, with instant access to legal tender in cases where you can’t use credit or debit.

  15. mac-phisto says:

    the writer doesn’t comment on whether or not a police report was filed. i would bet anything that one wasn’t. to echo FitJulie, that should release the victim of any future liability. merchants don’t usually harass victims who have an affidavit on file that proves their innocence.

    i can attest to the fact that a check on a closed account is returned to the depositor differently than a fraudulent check. there are different clearing house codes for each (acct closed vs fraudulent item) & a check cannot be returned with multiple codes.

    i think it would be best practice to close the account & file a police report.

  16. @brettt: What do you do when your wallet gets stolen?

  17. Pelagius says:

    @alexander: When I moved to Australia it took some time for me to get my head around the fact that no one uses checks. It’s all about electronic transfers there. It can be done.

    And once we manage that, we can work on getting rid of the penny and the dollar bill.

  18. ChiefDanGeorge says:

    As long as government agencies are going to charge me a fee for paying taxes or other fees for using a credit card, I am going to use a check.

  19. lore says:

    @Rectilinear Propagation:

    Easy! Steal someone else’s!

  20. mathew says:

    I NEVER carry a checkbook around.

    Apart from the hassle of it being impossible to cancel checks in any meaningful fashion, there’s the issue that in some states, passing a bad check is a felony. Want to have to clean that up off your record?

  21. speedwell (propagandist and secular snarkist) says:

    Interestingly, passing a bad check in many jurisdictions is only a crime if you intended to do it. Not knowingly doing it is a defense, especially if you tried unsuccessfully to arrange things with the creditor.

    It happened to me like that years ago when I was poor and married to a stupid man with no money sense. He decided one day to close our accounts and switch us to another bank, without telling me. I got the mess mostly cleaned up by calling the stores I had written checks to and telling them what happened and offering to go down and pay them right away if they would waive their fee for the bad check. Each of the handful of creditors were happy to do so, incidentally.

    Then a few months later, a couple cops showed up at my door and hauled me down to the jail. Why? One of the creditors, a grocery store, didn’t get their story straight. I had paid them the six dollars or so with a new check, but they never cashed it or marked my account settled. Their corporate office noticed the outstanding account and instead of calling me or the store, simply reported the matter to the police and had me arrested. I had the money and was going to pay to get out of jail, but I noticed that part of the process was signing a form “confessing” to writing a check while “knowingly” not having the funds to cover it. I was not about to “confess” to any such thing, since I wrote the check in good faith. I got a Legal Aid lawyer (yeah I was that poor), applied for bail, and they let me out on my own recognizance.

    Anyway, the corporate office sent a lawyer from two states away to the court hearing. The judge heard my side of the story and that I was still willing to pay the amount of the original check, blinked a couple times, and read the lawyer the riot act for charging the store hundreds of dollars for a business trip to collect on a six dollar account. The judge then asked me if I could pay them right then, and I said feebly, “Um, yeah, but all I have is a check.” Everyone laughed but the store’s lawyer. My legal aid lawyer actually paid the cash for me and let me reimburse her with the check. The store’s lawyer still tried to get me stuck with a bad check crime on my record, but the judge refused to allow that. Guess he figured I had been through enough.