Check Fraud

Speaker 1 (00:08):
Welcome to the Feeling is Mutual podcast. I'm your host, Tracy Becher, vice President of Marketing at First Federal Savings Bank. We are a community bank with a mutual charter. If you thought banking was boring, the feeling is mutual. But we're here to take the boring out of banking. In this podcast, we will bring our listeners real life stories and education on financial topics and it's all going to be delivered in a quick, fun and interesting format. Today we are going to dive into a more serious topic that is prevalent in today's banking industry, and that is check fraud. In 2022, the American Bankers Association estimated that approximately 7 billion in forged, counterfeit and lost and stolen checks were processed through the banks in the latest surveys they conducted. Today our discussion is going to be with two individuals who are no strangers to fraud and who are at the forefront of seeing these crimes in real time, kind of like our own little CSI officers. Behind the scenes we have Chief Information Officer, Leann Whitney, and Chief Financial Officer Tracy Rick Co. Hello ladies. Hello. 

Speaker 2 (01:39):
Hi Tracy. 

Speaker 1 (01:40):
Ladies, I'll be honest, this is a scary topic because I think we all feel that this could never happen to us. I know myself, I don't write very many checks, so I'm sure that after this discussion I will learn some valuable insight that I too need to pay more attention to. But I'm hoping that you guys can share some important information on this topic for us. Tracy, I'm gonna start with you. How does check fraud happen? 

Speaker 2 (02:10):
Great question, Tracy. It can happen in many different ways. The most prevalent way recently starts with mail fraud. The criminal steals the US mail looking for envelopes containing checks. Criminals will drive through neighborhoods looking for the red flag up on the residence mailboxes. They know there is potentially that birthday card with a check inside or perhaps your utility bill with your payment. Enclosed thieves also do what is called fishing in US Postal Service boxes. Now what is that? They put a sticky trap at the end of a poll. I'm not even kidding. <laugh> and retrieve mail out of the mailboxes. The mailbox is left completely intact and the postal service is not even aware. The mail has been, 

Speaker 1 (03:00):
It's so surprising to me because especially the US Postal mailboxes, like nobody's going to be seeing them do this because most of the mail is emptied out by afternoon. So most of these crimes probably occur in daylight and it's just funny to me that they're that brazen to think they can get away with that. 

Speaker 2 (03:23):
I completely agree. I think the old adage, uh, see something, say something hopefully kind of goes into play here. 

Speaker 1 (03:30):
Exactly. Let's be honest, there are times when certain businesses require only check payments. I know for instance, my dry cleaner, you can only write a check and we all know that there are certain individuals who feel more secure getting that physical check in hand or in the mail. Mm-hmm. <affirmative> Tracy, what types of fraud are we typically seeing? 

Speaker 2 (03:52):
Surprisingly, there are several different types of fraud, uh, but the three that we're seeing in society right now are forgery, washing, and counterfeiting. So let's go over that. Forgery is the signing of a check without the proper authorization. So what does that mean? A family member or perhaps a friend not on the account gets ahold of several blank checks and just starts using them. Now what's washing once a criminal obtains a written signed check from the mail, the thieve will remove the paid to the order of either by erasing or scratching or possibly leaching it out, and they will replace that paid to the order with their name. And sometimes they get brazen enough where they actually remove how much they're writing the check for and replace that with a higher dollar amount and then they'll cash it. Now, what's counterfeiting, once a criminal does have a signed check, they can actually order additional check stock from a printing company. They have your account number, they have your routing number, your actual signature. They have your check style and they know what check range you're in. So how scary is that 

Speaker 3 (05:08):
Ek? 

Speaker 1 (05:08):
Oof. It sounds very sophisticated and not to mention time consuming and I know we've all heard it. If these individuals use their time for good instead of that, I think we would be in a much better place. 

Speaker 2 (05:21):
I, I agree. Tracy 

Speaker 1 (05:22):
<laugh>, Leanne is Chief Information Officer. I know you see firsthand and often behind the seeds the financial strain that it has not only on the customer, but for the banks. How does check fraud affect customers and the bank? And more importantly, what can we do to prevent it? 

Speaker 3 (05:44):
Those are great questions, Tracy. So of course the most common concern related to check fraud tends to be the loss of money. Even if those funds are returned, there can be other problems or hassles. In most cases, it can best to close that defrauded checking account and open a new account. This oftentimes means, ugh, changing your payment account information for vendors. Oh yeah, <laugh> and usually means ordering a brand new debit card at the same time, which is quite a hassle for businesses. One incident of check fraud can easily be detrimental to customer and vendor relationships also and cause reputational damage for individuals. Unchecked occurrences of fraud could cause long-term damage to your credit score also, and leave other finances at risk. 

Speaker 1 (06:31):
You know, Leanne, if I can just add, it may seem like, um, a major inconvenience for the customer, but when you stop to realize long term, you're so much better off by taking the precautionary steps that the individuals at the bank are recommending. Like you said, I know it's a pain to change all your payment vendors, but in the long run it benefits the customer and the bank. 

Speaker 3 (07:01):
Right, exactly. So yeah, unfortunately, check fraud can happen to anyone, whether it's a stolen blank check or stolen mail or even looking through garbage to find canceled checks. There are some ways that you can help prevent or quickly report check fraud when you find out that it happens. If you actually have to write a check, make sure that you're reconciling your checking account. Make sure you're reviewing your statements every month. 

Speaker 2 (07:29):
And it's also important to note that you need to look at those check images too. 

Speaker 3 (07:33):
Absolutely. Keep those check images, in fact, or those canceled checks if you're still getting those back in a secure location and destroy those checks after you no longer need them. For instance, for tax purposes. Also, you should never give your checking account information to anyone, especially over the phone. Limit the information that's written on a check. I remember the old school days where you wanted to put as much as you possibly could on your printed check to avoid being asked for it in the future. But don't include your social security number on your checks. Don't put your driver's license 

Speaker 2 (08:08):
Number. Oh my goodness. No 

Speaker 3 (08:10):
<laugh>. No. 

Speaker 1 (08:11):
Although I remember when I first started at the bank a long time ago, we did include our social security number on there. 

Speaker 3 (08:17):
We did. And to think of that now is just crazy. And you'll also wanna make sure that your checks that you have printed have built in security features. While you might pay a little bit more in the short run for those checks, you'll be grateful for the security measures that you have in the long run. 

Speaker 1 (08:35):
And what are some of those features? 

Speaker 2 (08:37):
Um, like the watermark. Okay. That a lot of times they have an already unprinted watermark or they may have, um, like a fade out feature. Okay. Where up top, it's got more of like a bluish with boxes, and as you get down to the the bottom, it's less blue. Mm-hmm. <affirmative>, those are just a couple of 'em. Um, like the more sophisticated official checks actually have like a heat sensor on it. Okay. Where you can place your fingerprint on it and it will change color. 

Speaker 1 (09:04):
Oh, fancy. Awesome. Thank you. Now, how do you feel about, um, I know a lot of people like to go through like a vendor, like, um, checks are us to order their checks. What, what, do you have any feelings or? 

Speaker 2 (09:19):
I would, I would say go with more of the preferred vendor, um, that your bank is working with. They have a relationship with that vendor and the bank would already know what kind of security features are available for those businesses. 

Speaker 1 (09:33):
Okay. 

Speaker 3 (09:34):
Great information. Some other good options is to never endorse a check until you're ready to cash or deposit that check. Also write the check out in a dark permanent ink pen. Some say gel pens are harder to wash. Be consistent with your signature banks attempt to compare your signature as the part of fraud prevention. So that signature that you provided when you opened your account is what we're looking at when we're comparing signatures. And oftentimes when we write checks, we tend to scribble it a little bit more. Try to be consistent with that signature. Yeah. 

Speaker 2 (10:08):
It might get you in front of that, uh, that transaction a little quicker if you do that squiggle, but it makes it far easier for that fraudster to do a squiggle as well. 

Speaker 3 (10:19):
Absolutely. And also a lot of people don't think about this, but don't leave blank spaces on your checks. If you're gonna write a checkout, fill in the entire check amount box and write the sense in a way that they can't be altered for the written amount. Start at the far left edge of that line and put a slash between the cents and the 100 and draw a line after the cents all the way to the right end of the dollar line. Don't leave any room for that information to be modified. 

Speaker 1 (10:48):
Good suggestion. I never thought of that lion. Yeah. 

Speaker 3 (10:50):
You can Google how to write a check and you'll be able to see images of of well written checks. That's something that some people who don't have experience in writing checks might wanna take a look at in order to help ensure that they're writing their checks out properly. 

Speaker 1 (11:03):
And I know some of the younger generation is not familiar without a write a check out either. So 

Speaker 3 (11:09):
No, there's a lot. Yeah, <laugh>. And then also if you want to avoid writing checks, which is by far the best way to avoid check fraud altogether, you know there's some options. You can pay your bills online, preferably using your bank's bill payment service. You won't need to write a check, you won't need to pay for postage or you won't need to send a check in the mail. You can always use your debit card for purchases. Set up automatic payments for regular bills, set up alerts on your account. This is one of my favorites. 

Speaker 2 (11:43):
Mine too, Leanne. I just love those alerts. 

Speaker 3 (11:45):
Love it, love it. Many banks provide customers with the ability to set up alerts for when transactions occur. You can get alerts for all of the withdrawals, limited to the withdrawals over a certain threshold and for when your account drops below a certain balance. 

Speaker 1 (12:02):
Great information. I think we are all going to be watching our bank statements a little more closely and not to mention maybe work with our bank representatives on setting up our alerts. I know I have those as well. And that is a very valuable feature of the accounts that we have here at first Federal Savings Bank. Leanne, can you just share with us what to do if we have that feeling that we may be a victim of Chuck fraud? 

Speaker 3 (12:31):
Well, that would be unfortunate, but if you think that you've been targeted or you are an actual victim of check fraud, first things first. Reach out to your bank where your checking account is located. They might suggest that you place additional stop payments on other checks or check ranges. You may also be directed to close the affected accounts and open a new account. You should also contact any of your creditors that may have been impacted by the fraud. So for instance, a check that you wrote out to a vendor may not have actually made it to that vendor because the check was stolen in the US mail and then washed and cashed by somebody else. So that means that the vendor you sent the payment to did not receive the payment. 

Speaker 2 (13:13):
And unfortunately that vendor is not been paid and they really won't care why they weren't paid. Mm-hmm. <affirmative>, you are past due. 

Speaker 3 (13:22):
Right. Lastly, file a police report and monitor your credit since US mail theft and fraud has been so prevalent. One other thing that you can do is if you think that you've been a victim of male theft related check fraud, you should also report it to the US Postal Inspection Service. They actually have a specific website for it@usps.gov. You can report that fraud there. 

Speaker 1 (13:49):
Okay. Well, I would like to thank you Leanne and Tracy for sharing all of this wonderful information. It's such an important topic. And again, to reiterate, if you have that feeling that you are a victim or have that funny feeling or in doubt, please give your friends that first Federal Savings Bank a call, and we can help walk you through all the steps to help you protect yourself and of course, your most valuable assets. And also, just to remind everyone that if you are looking to read more additional information on this very important topic, to go to our website, www F f s b web.com, and go to our blog where Tracy and Leanne will have a featured blog post on all of the great information that they shared today. And also thank you to all of our listeners. We your time and taking a few minutes to listen to us. We look forward to bringing you more great topics and speakers, and have a wonderful day. Bye now. Goodbye.