Take Key
Steps to Guard Against
Rising Check Fraud
By Robert K. Heady
Bank Rate Monitor
Stolen
credit cards and Social Security numbers aren't the only bad
things that can mess up your financial life.
There's also attempted
check fraud, which has doubled in the past two years to billions
of dollars.
It's involved consumers
committing foolish acts such as leaving their blank checks lying
around to be stolen and forged, throwing their canceled checks
and bank statements away in the trash, or some retail crook in
a store altering the amount of a check after you've paid for
merchandise.
Since American Bankers
Association's last check fraud survey, the actual number of cases
has zoomed by more than 60 percent to 447,342 cases in one year.
The average loss per case stood at about $1,500, with large banks
accounting for 90 percent of the losses. Small community banks'
share of industry losses remained small, but there's been an
18 percent increase in the past couple of years.
One of every three
check frauds involves a forgery, where the thief imitates the
maker's signature and/or endorsement. Next come insufficient
funds (NSFs) -- bounced checks that customers never pay -- and
third, counterfeit checks that are cranked out by a thief's high-tech
office equipment such as color copiers and fancy software.
You're probably not
aware that these crimes have become such a huge business. Ernst
& Young, the big accounting firm, estimates that each year
more than 500 million checks are forged, representing
more than $10 billion in lost money. The federal government's
Office of the Comptroller of the Currency says every year financial
institutions lose about 12 times more money in check fraud than
they do from robberies.
Can you get hurt real
badly from a forgery? Oh, yes. Last February I wrote about how
one reader, Bobby L., was hit when a ex-girlfriend and her buddies
stole some of his blank checks while he was out of town in December.
They forged his name on three checks totaling $9,000 and cashed
them. Only last week -- nearly seven months later -- did Bobby
report that his bank was finally going to give him all of his
money back )after trying to settle for only half the amount).
Problem is, is you
become a check fraud victim, you may not discover it until it's
too late. It may take days, or even weeks, before you're aware
of it. You may not be able to report the crime when it happens
-- not until you receive an overdraft notice from the bank or
study your monthly bank statement and spot the theft. Or, you
might try to cash a check at your institution and be told that
your balance is down to zip.
Rule No. 1:
Check your checking balance two or three times a month. Not only
will you be better able to monitor your account activity, you
may stop the same thief from continuing on a crime spree. Tip:
Most check fraud happens during the big holiday shopping months,
between October and February.
What you should do:
- Guard your checkbook and buy a shredder. Shred old unwanted, canceled checks and statements.
- Never, ever, imprint your Social Security and driver's license numbers on your checks. Believe it or not, some people do.
- Don't endorse the bank of any check until you're ready to cash or deposit it or to make another transaction. Don't throw away old unused, imprinted checks that the crook could pull out of your trash.
- If you believe you've been ripped off, notify your local police immediately, as well as your bank. Also contact the FTC's Office of Consumer Protection at www.ftc.gov.
P.S.
-- On a whole other subject, how did your investments fare during
the first half of 2001? Using a $10,000 investment as an example
and three of the major stock indexes as benchmarks, if you had
bought Dow Jones Industrials, you would have lost 291. S&P
500 stocks would have lost you $784, while NASDAQ composite stocks
are down by a whopping $1,643.
On the other hand,
investing the same $10K in the average federally insured, six-month
bank CD would have earned you more than $200 up to this point.
Better luck in the
second half.
Editor's Note: Robert K. Heady is the founding publisher of Bank Rate Monitor and is the co-author of the book, "The Complete Idiot's Guide to Managing Your Money." You can e-mail him at jrnl8888@aol.com.
