PERSONAL FINANCE / KATHY M. KRISTOF : Keeping a Check on Check Crime : Forgery is Soaring, Aided in Part by Consumer Ignorance
Nothing to worry about, Teresa Evanko thought.
She had canceled her credit cards right after her wallet was stolen. Her checkbook was also missing. But a criminal couldn’t use that, because cashing a check requires photo identification, the Washington architect reasoned. What happened next made Evanko think twice.
Two days after her purse was stolen, Evanko learned that a ring of crooks was using her checks to buy expensive stereo equipment in Maryland. She later learned they’d also opened a new credit card account in her name.
After three months of battling with merchants and filing reports with banks and police, she’s still worried that the experience has scarred her credit report.
Check fraud is skyrocketing thanks to a confluence of factors, including the poor economy and increasingly sophisticated high-tech gadgetry. That most consumers think it’s impossible to use someone else’s checking account without positive identification has also contributed to the rise in forgeries. When wallets are lost, few people bother to close their checking accounts as quickly as they cancel their credit cards.
While no one has precise statistics, some experts estimate that check fraud has tripled or quadrupled in the past two years and now costs more than $5 billion annually.
Merchants and banks, pushed into action by the sheer size of their losses, are now forming alliances to combat check forgeries--which account for between one-third and one-half of all check fraud. But for many consumers, the efforts may prove too little too late.
In a survey last year, the American Bankers Assn. uncovered 537,000 cases of check fraud, about half of which were related to criminals forging checks against the accounts of real customers. The ABA has not yet completed its 1993 survey, but some maintain that the problem has doubled since then.
Consumers are not held liable for checks forged against their bank accounts. But the repercussions of a stolen checkbook or check can dog you for years, fouling up your credit record and forcing you to file statement after statement attesting that you’re the victim, not the criminal.
“The victim of this kind of a crime feels as bloodied and violated as the victim of a violent crime,” says Lisa Wilhelm, vice president and division manager at Wells Fargo Bank in San Francisco. “But until it happens, most people are unaware of what it does to their credit rating, their privacy and their feeling of safety. It is a terrible violation to be victimized this way.”
A number of factors have combined to boost check fraud recently. One is the recession. Financial crimes of all types burgeon during recessions because criminals are simply more desperate, law enforcement officials say.
However, technology has also contributed to the current forgery boom. Increasing sophistication in desktop publishing and the advent of color copiers has made it easy to produce--and reproduce--realistic checks. All you need is the account information. Indeed, if you lose just one check, a criminal can take that check and reproduce hundreds of perfect color copies.
Fake identification is also easy to make or buy. In fact, if a savvy criminal gets enough information about you, he can go the Department of Motor Vehicles, pretend he’s lost his driver’s license and get a new one bearing your name and his picture.
Merchants and banks are attempting to combat the problem through a variety of programs, including a shared information network called SCAN and a hot line for lost or stolen checks, operated by SCAN’s parent company, Deluxe Corp. of Minneapolis.
However, both programs are in the initial stages and don’t have enough participation to be thoroughly effective.
Merchants that are on the system are electronically signaled not to accept checks from certain individuals, says Dennis duNann, president and chief executive of Electronic Transaction Corp. in Seattle. Over the long term, the system should make it easier for everyone--except criminals and scofflaws--to write checks, he says.
Meanwhile, Wells Fargo started a reward poster program last year that pictures suspected check forgers and offers $1,000 for information leading to their capture. So far, the program has netted four of the 22 suspects featured, Wilhelm says. She also believes it has sent a signal to criminals that Wells Fargo takes such crimes against customers seriously.
However, experts maintain that consumers must serve as their own first line of defense. If you lose your checks by accident or theft, notify your bank and close your account immediately. That’s inconvenient because you probably have outstanding checks that you want paid. Nonetheless, if you don’t close the account, a criminal might use your name and eventually bounce checks on your bank account. And you’re the one who will be hounded by creditors.
Briefly . . .
Because of tremendous confusion about the new Social Security tax, Kathy Kristof has prepared a booklet and work sheet to help seniors determine how the new tax will affect them and what they can do about it. For a copy, please send a written request, with your name, address and check or money order for $2.95 made out to the Los Angeles Times. The price includes postage, handling and sales tax. Mail to Retirees’ Tax Tips, P.O. Box 60395, Los Angeles, Calif. 90052. Please allow two to three weeks for delivery.
Protect Yourself From Check Fraud Although check forgery is clearly on the rise, there are a number of things consumers can do to reduce their risk of being victimized, industry experts say.
* Monitor your bank statement. Make sure you read through and verify your checking account statement each month. If you spot an unfamiliar item, call your bank and seriously consider closing your account.
* Treat your checks like real money. Don’t leave them around where somebody might take them. Don’t use voided checks or deposit slips for scrap paper. Don’t let friends or relatives write checks against your account.
* Never have your Social Security number or driver’s license number pre-printed on your checks. If you lose one of these blank checks, a criminal has everything he or she needs to obtain fake identification, credit cards and more with your name on them.
* Inform your bank immediately if your checks are lost or stolen and close your account. Most banks will work with you to pay creditors who are holding legitimate checks, while blocking all illegitimate claims. But to effectively block the criminals, you must close your account.
* Take care with trash. “Dumpster diving” is a popular sport with check forgers. They look through trash to find information about high-balance accounts. If you must throw away bank statements, deposit slips or checks, make sure you tear them up.
