Credit Unions Grapple with Check Scams; Fight to Identify and Stop Them

Katie Clark, your Association’s Director of Regulatory Affairs and Risk Management, dives into what credit unions can do to detect these scams.

Katie Clark, Directory, Regulatory Affairs & Risk Management

Katie Clark, Director, NWCUA Regulatory Affairs & Risk Management

3/19/2019

Who would have thought that by 2019, counterfeit official checks would still be so prevalent? Credit unions continue to report a large amount of counterfeit checks circulating in their name—and what’s worse—people are still falling victim to the scams that we all know about and warn against.

There is not much to be done in regard to stopping the production of counterfeit checks, but credit unions are in a great position to detect and prevent negotiation of such items. Credit union staff that accept checks for negotiation, review mobile deposits, and process ATM deposits are in a prime position to detect the common signs of a counterfeit check and take the necessary steps to verify the legitimacy of the check.

Regarding the physical check, staff should be on the lookout for:

  • Fuzzy logos that look as if they were copied or photoshopped;
  • Watermarks that are supposed to appear when a check is photocopied;
  • Inconsistent fonts;
  • Misspelling of addresses, cities, etc.;
  • Dollar amounts that seem to be under a specific amount, for example: $4,980; and
  • Rounded border edges.

Not all of these red flags will appear on the check at the same time, and not all of these red flags will necessarily indicate that the check is not legitimate. However, the presence of these red flags should prompt the credit union to ask additional questions of the individual presenting the check and/or contact the issuing financial institution to verify legitimacy of the check. It is important to note that the phone number used to contact the financial institution should be obtained independently of any information printed on the check or provided by the payee.

If you are able to question the payee, try to obtain answers for the following questions (not in any specific order):

  • Did you receive this check via the mail, UPS, FedEx, etc.?
  • Have you ever met the person that sent you the check in person?
  • Were you told to deposit the check and remit any portion of the funds to another party by wire transfer, electronic transfer, Western Union, peer to peer, or official check?
  • Were the funds received in relation to any of the following:
    • Work from home job found online?
    • Receipt for an item being sold online?
    • A friend/romantic interest that you met online?
    • Proceeds of a lottery or other drawing that you did not enter?
    • Proceeds from an estate of a wealthy relative that you were not aware of?
  • Were you told not to discuss this with anyone?

Asking the member some of these questions will help them realize that the check might be related to a scam. The best way to protect members from scams, along with constant education, is to try to identify the counterfeit checks at the time they are presented—not after they are returned unpaid.

Does your credit union need assistance dealing with a counterfeit cashier’s check scam? Call your Association. We are here to help. Reach Katie Clark by email or by phone toll free at 800-995-9064, extension 221.