Cheque fraud is among the oldest and most common forms of financial crime. Even with the advent of electronic payment products, cheques still account for billions of payments each year, making them a prime target for criminals.
There are three main types of cheque fraud:
· Counterfeit - cheques not written or authorized by legitimate account holder
· Forged - Stolen cheque not signed by account holder
· Altered - an item that has been properly issued by the account holder but has been intercepted and the payee and/or the amount of the item have been altered
How you can protect yourself from fraud for items drawn on your account:
1. Reduce the use of cheques in favour of electronic payments such as wire payments, direct deposit and pre-authorized payments
2. Choose envelopes that make cheques hard to detect while in transit. This helps to minimize the risk of cheques being intercepted
3. Keep cheque stock in a secure location
4. Destroy unused cheques from closed accounts immediately
5. Checks and Balances - split responsibilities so that no one person is responsible for cheque issuance and reconciliation
6. Prompt account reconciliation - Reconcile your statements as soon as they are received. To speed things up, many clients see a significant advantage in products such as the CIBC FirstCaribbean Online banking platform When re-ordering cheques, use a continuous set of serial numbers
7. Order only one set of cheques per account
8. When laser-printing cheques, issue multiple passwords to those responsible for cheque printing and use cheque paper with toner anchorage to permanently bond toner ink into the paper
9. Use high quality cheques employing a reasonable mix of security features. Davis and Henderson meet all of CIBC FirstCaribbean's requirements for cheque printers
10. Report any old outstanding cheques and suspected fraud on your account immediately
Criminals want you to do their banking for them. If they earn your trust, they'll use your account to cash phony cheques, collect funds from other accounts, and move stolen money offshore. They use a variety of schemes to convince you that they're legitimate. Some will even give you money to earn your trust. By accepting and re-directing electronic deposits (such as wire transfers), you could be participating in a money-laundering scheme if those deposits were proceeds of a fraud or other criminal activity. The stories vary, but the results are the same: fraud and financial loss.
A criminal tells you you've won a lottery. But taxes need to be paid first. If you're unable to pay the fee on your own, you may be offered financing from a third party (who is involved in the scheme). You receive a cheque to cover the taxes and then wire the money to cover the taxes. Afterward, you learn that the original cheque was fraudulent and that you're responsible for the losses.
The criminal buys something from you and overpays for the item. After you refund the difference, you learn that the original payment was fraudulent and the charges have been reversed.
A job offer involves receiving funds into your bank account and then transferring a portion of the collected funds on to another account. After transferring the funds, you learn the original transaction has been reversed.
A criminal tells you they are a government official from another country, and that they need your help getting funds out of the country. You receive monies and then forward them. Like the above cases, the original deposit is fraudulent and you're liable for the amount forwarded.
A relative you never met has left you money in their will. But you need to pay service fees before receiving the funds. Like the other examples above, this scam can leave you on the hook for significant financial losses.