Despite recent innovations in check processing (such as the “Check 21″ law that went into affect in 2004 and which causes most checks to be processed electronically), check fraud is still widespread.

 

We’ve talked about “check kiting” as a form of fraud in the past. Today, we’ll briefly discuss some other types of check fraud that still exist. Why do you need to know about this stuff? … You need to watch out to make sure you are not a victim of check fraud. Check fraud typically results in overdrawn and closed accounts (and if you are suspected of being involved, will certainly land you on the ChexSystems list).

Altered Checks

Altered checks are a common fraud that occurs after a legitimate check writer creates a valid check to pay a debt. A criminal then takes the good check and uses chemicals or other means to erase the amount or the name of the payee, so that new information can be entered. The new information can be added by typewriter, in handwriting, or with a laser printer or check imprinter, whichever seems most appropriate to the check.

Counterfeit Checks

Counterfeit checks are checks that are presented based on fraudulent identification. Counterfeit checks may also be fake checks drawn on valid accounts.

Identity Theft and Checks

A common form of check fraud is when a theif assumes someone’s identity and poses as them to write checks. This is also called “identity assumption”. Identity assumption in check fraud occurs when criminals learn information about a financial institution customer, such as name, address, financial institution account number, social security number, home and work telephone numbers, or employer, and use the information to misrepresent themselves as the valid financial institution customer. These schemes may involve changing account information, creating fake transactions between unsuspecting parties, or preparing checks drawn on the valid account that are presented using false identification. To prevent this kind of theft from happening to you, make sure to always protect your social security number and banking information.

Closed Account Fraud

Closed account frauds involve checks being written against closed checking accounts. This type of fraud generally relies upon the
float time involved in checking transactions that involve multiple banks. Closed account fraud can occur when you don’t destroy checks from a closed account, or when you forget to tell your bank that you want to close your account.

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Related ChexSystems Banking Information:

1. What do I Need to Open a Business Checking Account?
2. How to Find Your Checking Account Number on a Check
3. How to Open a Bank Account with no Credit Check
4. Opening a Checking Account with Bad Credit
5. Opening a Checking Account: What to Consider