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BBB: Fake Check Scams Growing
Wednesday, September 12, 2018 6:30 AM

Fake check scams are booming, according to the Better Business Bureau, which issued a new report on the tactics this month.

The BBB said reports of fake check scams were involved in about 7 percent of all complaints filed with the BBB Scam Tracker and that the number of complaints to the Federal Trade Commission’s Consumer Sentinel database and the Internet Fraud Complaint Center more than doubled between 2014 and 2017. The average consumer loss was $1,008. Consumers aren’t the only ones losing money, though.

“During 2016, total check frauds cost banks $789 million, a 25 percent increase from two years before,” the BBB said. "Efforts by banks stopped $7.8 billion in losses to victims in 2016."

Much of the crime hinges on member misperceptions about how the check-clearing process works. “For fraudsters, the possibilities are almost endless in how they exploit people’s erroneous belief that having the money credited to a checking account means the check is good,” the BBB warned.

Credit unions and banks can help prevent check fraud by reminding members that crediting money to their accounts does not mean a check has cleared or is legitimate. The BBB advised credit unions and banks to look for these red flags often associated with fake checks:

  • Missing addresses and phone numbers for out-of-state checks over $1,000.
  • Shiny MICR numbers or no MICR numbers.
  • Sudden changes in member deposit behavior or frequency.
  • Frequent questions from the member about when the check will clear or the money will be available.
  • Online deposits from IP addresses not associated with the member.

Simply talking to members also can crack a case open, the BBB added.

“When customers have deposited a check and ask to withdraw it in cash, simply asking nicely what the customer may do with the money may produce a response indicating that someone thinks they have won a lottery or sweepstakes,” the BBB said. “Most people are willing to engage, especially when it is clear that the teller is honestly trying to help. For example, the teller may ask why, if someone has won a lottery, the check is from a tire company.”

Read the article in its entirety at Credit Union Times.