In a digital age concerned with technology and cybersecurity, there is no more prevalent fraud than that of paper checks. The Association for Financial Professionals (AFP) presents data annually regarding payment fraud. In 2020 their report showed 66 percent of all fraud originating from paper checks.
Almost all check fraud has the same two elements:
1) someone you do not know and
2) that someone asking for money to be sent to someone else. Their stories can be especially believable. For example,the Federal Trade Commission (FTC) describes a scheme called overpayments, where an individual purchases an item from you and “accidentally” sends a check for too much. They ask you to refund the difference. After you send the money, the bank determines the check is a fraud. Ultimately, you will owe the bank for the difference.
You may be wondering why this old technology is finding such success as a fraud in our digital age. At Farmers and Mechanics, we are finding these checks are frequently being deposited via mobile deposit or they come to the bank as cashiers checks. They look real, and as the FTC notes, “by law, banks have to make deposited funds available quickly, usually within two days. Fake checks can take weeks to be discovered and untangled.”
This technology works because it is so easy to fake a check, the payoff is quick, and the schemes make it difficult to track.
There are four strategies the FTC recommends you do to avoid becoming the victim of check fraud.
1) Be wary. Feel free to contact your bank first before you accept a check.
2) Never take a check for more than your selling price.
3) When selling online, consider using an escrow or online payment service.
4) Never send money back to someone who sent you a check.
We at the bank work diligently daily to ensure your safety. We do not want anyone within our community to fall victim to these scams. If you have any questions or concerns, please reach out. Anyone at our bank, or any of the banks in this community, will be happy to help you determine the legitimacy of a transaction and its related check. Our team can be reached locally at 812-384-4473.
AFP. “2021 AFP Payments Fraud and Control Survey Report.” https://www.synovus.com/-/media/files/business/webinars/2021_paymentsfraudsurveyreport-3.pdf?la=enFTC. “How to Spot, Avoid, and Report Fake Check Scams.” https://www.consumer.ftc.gov/articles/how-spot-avoid-and-report-fake-check-scams#Types
Joshua Riggins is the president of Farmers & Mechanics Federal Bank in Bloomfield, and is committed to providing customers with a reliable and competent banking experience.