For some reason, the first thing I thought of when selecting today’s topic was Smokey Bear’s famous quote: “Only YOU can prevent forest fires.” Forest fires are not check fraud. Admittedly, it is not a perfect analogy and saying “you can do a lot to prevent check fraud and respond to it” does not have the same ring to it. As everyone reading this knows, check fraud is a hot issue. FinCEN has noted significant upticks each of the last couple of years, and I’m sure all of our members have seen this issue pop up; we certainly get many questions about it on the Compliance Hub Hotline. Our member banks have a number of resources available to help with check fraud issues, and we want to make sure everyone knows exactly what is available.
Over the last year, we have put out two webinars on check fraud. There is our “How to Deal with Fraudulent Checks” webinar from May 2023 and our “A Closer Look Into Altered Checks” webinar from October 2023. If watching webinars isn’t your thing, each of our webinars has a desk manual that lays out the content in writing and provides legal/regulatory citations to the relevant information.
We have a number of articles related to this subject as well. The feature article of our November 2023 ACCESS Magazine was “Breaching Confusion on Breaches of Warranty.” Our June 2023 ACCESS Magazine feature article was “The Midnight Deadline and Presentment Warranties.” We also have a prior newsletter article on the latter subject as well.
When dealing with a check fraud or forgery claim our “Affidavit for Check Forgery” tool may be useful. Our Regulation CC Toolkit may also be useful here, particularly with establishing any holds on questionable checks.
Last year, FinCEN issued an alert about the check fraud surge. This alert provides red flags to assist banks in meeting their BSA obligation to identify and report suspicious activity. The alert encourages banks to share information under the safe harbor authorized by Section 314(b) of the USA PATRIOT Act; refer to FinCEN’s Section 314(b) page for additional information.
The United States Postal Inspection Service published Tips & Prevention on scams, an information page on check fraud, and a brochure banks can send to their customers, titled “Don’t Be a Victim of a Check Scam.” It also provides forms to report fraud.
The ABA offers a Check Fraud Claim Directory of contact information for banks needing to file a check warranty breach claim with another bank. It may be helpful when attempting to communicate with larger banks. To access the directory, a bank must participate by providing its fraud contacts but banks do not need to be an ABA member.
Check service providers commonly offer products and services designed to mitigate check fraud. Banks can contact their provider about whether these sorts of potential features are offered.
Remember, “you can do a lot to prevent check fraud and respond to it.”