Check Fraud

Nearly all of us have had it happen to us at least once. First all oxygen appears to be sucked from the room, then, almost simultaneously, your stomach is twisted into a pretzel as if you are one of the performers from Cirque de Sole, and it is only after the flood of fear that the true fun begins. No, I am not talking about the newest rollercoaster at Six Flags, but rather having someone access your checking account.

The world is becoming more sophisticated and in turn so are criminals becoming more adept at procuring your money, and while most of the time, simply by reporting your information to the bank you are able to recover your money, there are several rules that if you do not know could prevent you from recovery and worse leave you financially responsible.

Police officials view check fraud as a “white collar crime”, often going unprosecuted or resulting in either probation or a light jail sentence due to outdated state laws. Majority of the check fraud being conducted today is by organized gangs. But with the use of computers and scanners, the average person is now getting involved due to its simplicity of counterfeiting a stolen check. It has been reported that many of these gangs are involved in more serious crimes such as money laundering, drugs, and prostitution to name just a few. When an individual becomes involved it has been reported that he does to support a drug problem or to get out of debt. Check Fraud actually funds those criminal activities. http://www.ckfraud.org/depository.html

Recent changes in the Uniform Commercial Code have shifted the liability of forged checks off the banks and onto account holders. These new laws stress “due diligence” and “comparative negligence”, where parties split check fraud liability and monetary losses based upon the respective levels of fault.

The main thrust of these changes has come from Uniform Commercial Code Art. 4 part four. U.C.C. § 4-406. The bank first is required to send the customer a statement. This statement must be detailed enough to allow the customer to locate any charges that appear false or suspicious. The customer must promptly and diligently review this statement to determine whether any payment was not authorized or if any signature is not correct. The customer must then notify the bank and relay all relevant facts. If the customer delays too long in returning this information to the bank, the bank may not be required to return used funds or the customer may have to pay a portion of the used sums. U.C.C. § 4-406(4) (d). State statutes can differ as to what a reasonable time is in which the individual can notify the bank, but some limit it to thirty days after receiving the statement. And in nearly all states if the bank is not made aware within one year of the customer receiving a statement, the customer is precluded from asserting any claim against the bank.

The key is to act quickly and cooperatively with the bank in resolving what is undoubtedly a major headache, which if left untreated can turn into a major financial problem. One last tidbit of advice, while no one likes to receive and review their bank statements, it is imperative that you keep a close watch over your finances. One of the best methods of doing this is to view your account online. Nearly every bank will have the option of online statements as well as paper statements. These online statements are great because they are archived on your computer. Good luck and I hope this helps prevent you from becoming a victim.