One category of check fraud is check washing. It accounts for over $815,000,000 in losses per year. The practice began in the 1980’s and police and federal agents report in over 90% of the cases, the perpetrators were methamphetamine addicts or “speed heads”. In the worst instances, they have established networks or crime rings to conduct their operations.
The scheme is simple. Mail snatchers obtain checks via various methods, including looking through neighborhood mail boxes and inspecting outgoing mail and targeting postal vehicles, apartment mail panels, rural mail boxes, collection boxes and free-standing, clustered box units. Late evenings and early mornings are the most popular times for these scavenger hunts.
Once obtained, the fraudsters erase the payee and the amount – not the signature. The chemicals used vary, but many are found in household cleaning products available at many local retail stores. Some chemicals used are the by-products of a methamphetamine operation. Chemicals used include acetone (the most widely used), benzene, bleach, carbon tetrachloride, chloromice “T”, fox “IT”, clear correction fluids, and a high-performance eraser.
The culprits perpetrating this vary from a drug addict riding around on his bicycle stealing checks that are then washed and rewritten to themselves with potentially higher payment amounts using false “id” to cash them to sophisticated operations that have rings of check snatchers on the street and facilities where they wash the checks. Once the stolen checks are obtained, they place a protective low-adhesive tape or sticker over the signature line and place the check into a pan containing their cleaning solution. Once the ink has disappeared, they hang the check to dry. The result is a signed blank check which is altered to suit the fraudster. Others ride the streets equipped with a laptop computer, printer and laminating machine prepared to steal a check from your mailbox, alter the payee and/or amount, produce a fake “id” and cash the check before you get home from work. Even postal workers are beginning to take up the practice – they just take the mail out of the postal bag. The severity and growth of this problem has caused local and federal authorities to form task forces with postal inspectors, US attorney’s office, local police forgery units, the FBI and the Secret Service.
This crime affects individuals, families and businesses. What can one do to prevent falling victim? Consider the following preventions:
Opt for direct deposit of your payroll check. Payroll checks are a favorite target. If it’s an automated payment, there is no check to steal.
Use check stock that has embedded security features. Most check manufacturers have enhanced their check stock to include one or more of security features, such as
– watermarks (subtle designs that are visible when viewed at an angle and copiers and scanners can’t effectively copy)
– copy void pantograph (when copied the word “void” appears)
– chemical voids (can’t be treated without detection)
– high-resolution micro printing (extremely small printing around the signature area and borders of the check that become illegible when copied)
– three-dimensional reflective holostripe (metal strips that are difficult to scan or reproduce because of the sophisticated process used to produce them)
– security inks (chemical reactants produce permanent stains when treated)
– invisible fiber (fibers embedded in the sheet that are difficult to duplicate)
– visible fibers (seen on front and back and easily verified)
Many check mail order houses now include these features. Check with your bank or supplier to insure that your check stock includes features to prevent, chemical alteration, erasure, toner removal, photocopying, and counterfeiting. Banks are taking additional steps to combat this crime by working with their customers to develop due diligence procedures and upgrading their ID verification for non-account holders.
Use pens that are resistant to check washing. Gel pens with black ink are most resistant to check washing. Roller-ball, thick felt tip and fountain pens are good choices. Blue ink, ballpoint pens and “permanent markers” should be avoided.
Prepare the check in a manner that makes unauthorized changes difficult. Write the complete payee name and the amount clearly and take up all the space available of the respective lines. Note the purpose of the payment in the memo line.
Secure your mail. Steps you can take to secure your mail include:
– Don’t leave unopened or outgoing mail in your mail box for any longer than is necessary especially overnight and/or Sunday/holidays.
– Don’t alert check-snatchers by raising your mail flag for outgoing mail
– If you are not allowed to send mail at your office instead of home, take your mail to the post office, give it to a mail carrier, or put in a Post Office mail unit
– Place a hold on your postal delivery service when you’re be out of town
– Install/check locks on your mail box
– Report suspicious activity around mail receptacles, postal vehicles, etc.
– Report non-receipt of valuable mail to banks, credit card issuers, and postal authorities
– Protect and inventory your check supply and report missing or stolen checks to your bank immediately
– Properly store or dispose of cancelled checks
– Provide bank account information to reputable businesses or individuals only
– Pick-up new check stock or arrange delivery to your office
– Print or stamp return address on envelopes to prevent forgery
– Don’t discard cancelled checks, bills or credit card statements in the trash – shred them.
Learn how to detect an altered check. The following are a list of “red flags” to consider when examining checks: the printing/text on the check isn’t uniform in color or texture; the finish on the check feels softer than normal or bumpy; the paper color is grayish; the watermark is lighter than usual or removed; the check contains miss-spellings, typos, and/or grammatical errors; the pre-printed numbers on the check do not match properly (the two sets of numbers near the check number aren’t included in the routing /ABA number); the check number doesn’t repeat in the electronically generated serial number; and/or when questioned, the customer can’t keep his story straight.
Check your bank statements as soon as you receive them. Check bank, credit card, and other financial statements for signs of fraud and review cancelled checks to make sure the payee or amount has not been altered. After thirty days of receiving your bank statement, the bank does not have to reimburse your loss. Early detection and notification is essential.
Mail theft is a federal crime punishable with fines up to $250,000 and imprisonment up to five years upon conviction. The US Postal Inspection Service offers rewards for information leading to arrest and prosecution. Nonetheless, prevention is cheaper than prosecution. Avoid becoming a victim.
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