Check for fraud refers to categories of criminal offenses involving the use of unlawful checks to illegally obtain or borrow the use of funds not in account balances or legitimate holders of account holders. Most methods involve taking advantage of the float (time between check negotiations and permission in the author-check bank) to withdraw this fund. Special check fraud types include tick kiting , where funds are kept before the end of the floating period to cover fraud, and paper hangers , where buoys offer the opportunity to write fake checks but those accounts never refilled.
Video Cheque fraud
Type of check fraud
Check kiting
Check kiting refers to the use of buoys to exploit and suspend notices about funds that do not exist.
Embezzlement
While some inspection officers actually intend to bring their account into a good reputation, others, often known as a paper hanger, have pure fraud in mind, trying to "take the money and run."
Bad checklist
Checks are written for merchants or other recipients, hoping the recipient will not suspect that the check will not be clear. The buyer will then take the cash, goods, or services purchased by check, and will hope the recipient will not take action or will do so in vain.
Abandonment
The paper hanger keeps a one-time check that he knows is bad or fictitious in his account. When the bank considers the funds available (usually on the next business day), but before the bank is notified that the check is bad, then the paper hanger then withdraws the funds in cash. The offender knows that the check will bounce off, and the resulting account will owe, but the offender will leave the account and take the cash.
Such crimes are often used by small criminals to raise funds through rapid embezzlement, and are often carried out using fictitious or stolen identities to hide that actual offender.
This form of fraud is the basis for Nigerian check scams and other similar schemes; however, in this case, the victim will be the one accused of such a crime, and will be allowed to prove his innocence.
Counterfeit
Sometimes, fraud is the preferred method of deceiving the bank. One form of forgery involves using a victim's legal check, which has been stolen and then thawed, or changing a check that has been legally written for the offender, by adding words and/or numbers to inflame the amount (raising the check).
Other cases involve the use of fake checks, as in the case of Frank Abagnale. The offender goes through or tries to pass the check he or she has created, but it represents an account that does not exist.
Unusual case
The check washing involves the theft of transit examination between the author and the receiver, followed by the use of chemicals to remove ink that represents all the parts other than the signature. The perpetrator then fills the void for his benefit.
Sometimes check fraud comes from an employee of the bank itself, as is the case with Suzette A. Brock, who was convicted of theft for writing five company checks to her own birth name from her desk as a lending agent for Bank Banner from Walla Walla, WA.
The most famous "bad examiner" of the 20th century, Frank Abagnale, devised a scheme to place the wrong MICR number at the bottom of the check he wrote, so they would be transferred to the wrong Federal Reserve Bank for clearing. This allows him to work longer in one area before his criminal activity is detected. In the film, Catch Me if You Can, which depicts Abagnale's crime, shows Abagnale wetting the Pan Am plastic plane in his tub and removing the Pan Am badge on the toy. He will then place the decals on the bad check he wrote while pretending to be a Pan Am pilot. From his plan, Abagnale raised more than $ 2.5 million dollars.
Maps Cheque fraud
Fighting check fraud
In most jurisdictions, providing a check for a sum of money known to the author is not present in the account at the time of negotiation (or available for overdraft protection) is usually considered a violation of criminal law. However, a common practice followed by a bank is to refrain from suing a check writer if a check reaches the bank after sufficient funds have been deposited, allowing it to be clean. But account holders are generally responsible for all bank penalties, civil penalties, and criminal charges that are permitted by law if the checks do not clear the bank.
Only when successful check cleansing is due to kiting schemes, banks have traditionally taken action. Banks always have various methods to detect kiting schemes and stop them in acting. On-site computer systems will alert bank officials when customers engage in suspicious activities, including keeping the same checks, large monthly total deposits with an average daily balance of almost zero, or avoiding checkout by frequent use of ATMs for deposits.
New technologies that exist today can make most forms of kiting and check paper dependent on the past. Because new software quickly captures illegal activity at the teller/branch level instead of waiting for the night shift to the back office, the scheme is not only easier to detect, but can be prevented by tellers who reject illegal customer transactions even before they start.
Part of how banks combat check fraud is to offer their clients fraud protection services. Since it is not possible for a bank to know every check written by a customer and that may or may not be false, the responsibility is on the client to make the bank aware of what they are checking. This system allows customers to upload their check files to the bank including check numbers, the amount of money, and in some cases, the payee name. Now, when a check is presented for payment, the bank rubs it with the information in the file. If one of the variables does not match, then the check will be marked as a potentially deceptive item.
This service helps with external fraud but they do not help if there is internal fraud. If an employee sends information to the bank with counterfeit goods, then the bank will not know to refuse payment. A dual control system should be applied so as not to allocate all capabilities to one person.
Prior to the section on Check Clearing for the 21st Century Act , when checks can take 3 days or more to clean up, playing buoys is a fairly common practice in the US if on the other hand - most individuals who experience an emergency just before payday.
Circular fraud and neglect are gradually waived because the checks will be clear at Bank B on the same day when they are deposited to Bank A, without giving any time at all for no funds available for withdrawal. With image sharing technology, temporary funds available in Bank A account are written off on the same day.
While there may still be room for retail kiting, security measures by retail chains help reduce the incidence. Increasingly, the more chains that limit the amount of money back received, the amount of money back can be offered within a week or period of time, and obtain transactional account balances before offering money back, thus denying it to those with low balances. For example, Walmart's policy is to determine the account balance of those who get the money back, and some Safeway locations will not offer cash back on accounts with a balance below $ 250, even when the funds are enough to cover the amount on the check. Customers who are recorded for money back are often also investigated by the company to observe the pattern.
Some businesses will also use checks strictly as an information device to automatically debit funds from the account, and will return the goods to customers afterwards. However, in the United States this is done through Automated Clearing House (ACH); although faster than traditional check clearing, contrary to popular beliefs ACH is not instantaneous. Although this practice reduces the space for kiting (by reducing the float), it does not always eliminate it.
See also
- Advanced cost fraud
- Bad check return program
- Bank fraud
- ChexSystems
- Federal Bureau of Investigation
- The home banking scandal
- Job kiting, named by analogy
- Qchex
- United States Secret Service
- White-collar crime
References
External links
- National Check Fraud Center - description of laws in all 50 US states.
Source of the article : Wikipedia
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