Cheque Fraud is one of the oldest types of financial crime. Even in our computer and internet technology era, many still prefer to pay by cheque or bankers draft. The cause of this is people do not trust computer technology and have misconceptions about online banking. This is understandable because of the fact most of these humans are computer illiterate and what is unknown to human mind causes fear or rejection. This fear, however, is totally obsolete for statistics show online banking is safer than cheques. To protect yourself from cheque fraud I will show you some guidelines of necessary precaution you should take before you receive or send a cheque. Than it is your responsibility to inspect and analyze the cheque.
There are three main types of cheque fraud:
- Counterfeit Cheques – These are not written or authorized by legitimate account holder. The existence of counterfeit cheques is supported by new technology. Thieves use printers, copiers and newest software to make clone cheques with high resemblance to the original. Many times these are hard to recognized as false even by experts.
- Stolen Cheques – Cheque is not signed by account owner, rather stolen, usually out of the glove box of your car or your house. The signature is then forged and cheque used as pleased. Most of the time once you recognize your cheques are missing it is too late.
- Altered or Forged Cheques – The Cheque is properly issued by the account holder but has been intercepted and the beneficiary or the amount of the item have been altered or new information added. To do so, sharp instruments and chemicals are used.
- Closed Account – Bank accounts which are not used anymore or are closed, but cheques still exist for this particular account. If you don’t destroy those cheques you can be a potential victim.
- New Account – An identity is stolen or made up by false documents. If a fraudster has personal documents and some personal information, he can request a bank account in your name. Bankers, unknowingly accept these requests and open new accounts, giving scammers the opportunity to steal money from individuals or businesses in your name.
- Over payed Cheques – A false cheque issued by your “business partner” with a larger sum than required. The thief will then ask you if you can give him the change, making up different excuses why he transfered the over payed sum. The cheque is false and will be declined by the bank and you will end up losing the amount you gave him in exchange. Read Nigerian Fraud.
Some steps you can take to prevent your cheque being forged or information added after you wrote the cheque:
- Leave no gaps in your words
- Draw a Line after the name, amount and else where empty space was left
- Use full and correct names for all the information
- Prohibit transfer of cheque
- Never pre-sign cheques
- Don’t leave your chequebook in the glove box of your vehicle, a large percentage of stolen cheque books are taken from cars
- If you close an account, destroy any remaining cheques relevant to that account
If receiving a cheque you can:
- Ask for an ID. Only take a drivers license, personal ID or passport, don’t take other ID confirmations as they are relatively easier to fake. Even than be cautions, these documents can also be forged
- Compare the signature on the ID against the cheque signature
- Ask the person issuing the cheque to give you their home telephone number and maybe some sort of personal information, compare the number in your phone book and call the person at home
- Refuse cheques written with a pencil or cheque with signs of being altered
- Be wary of accepting cheques not signed in front of you or single cheques not being torn out of the cheque book. Thiefs often steal just one or two cheques to gain time before the owner of cheques suspects them missing
- Don’t give change on cheques (if the cheque is false and you already gave change, you were scammed)
People who are cashing cheques end up losing funds when the banks realize the cheques are false. That’s because people are held responsible for anything they deposit into their accounts.