Saturday, July 4, 2009

Bank Fraud Scam: The "Who's Who"

This US-only, 3-victim scam is designed to allow the perpetrator to spend small amounts of money from one victim's checking account, while convincing him or her that it was done by another victim. The money is paid to a third victim who has to refund it.

Imagine you get a phone call from a vendor telling you your check bounced, and demanding payment. Only you never heard of the vendor. Or perhaps you see some small checks clearing your bank account that you didn't write. You might be a vendor who gets checks from a local company which don't clear, and the vendor seems to be playing dumb to the fact.

All of these could be victims of this scam.


  1. Scammer obtains banking ID numbers of an existing valid account of Victim 1. This is usually done just by seeing the check. Any cashier can easily obtain the data, especially if they are using a mobile phone camera. The information needed is only the account number and routing number at the bottom of the check. This information is of course also available to anyone to whom you write a check.
  2. The scammer obtains the name and address of a valid company, which will become Victim 2. This can be as easy as going to the phone book or the internet. Just about any company will do.
  3. Scammer prints checks (easily done on any computer, no special ink necessary) which shows the routing and bank numbers of Victim 1 at the bottom of the check, and the company name and information of victim 2 at the top left of the check.
  4. Scammer then goes pays for services or goods from just about any retailer (victim 3) using the checks he has created. He signs his own name, or the name of any fake or stolen ID he has. The amounts of each check are usually under $100.
  5. The check confirms, because the numbers read by the cash register at the bottom are valid, and the balance is sufficient. The ID matches perfectly and signatures are spot-on. The name of the account is usually a corporation, and no retailer has a way of verifying if the signer is a signatory to accounts for the corporation.
  6. The check clears the account of Victim 1, who may or may not notice the small amount missing. If Victim 1 catches the bogus check, they notify the bank, which then closes the account and returns the check to the retailer or payee's bank.
  7. Victim 3, The retailer or payee, then gets notice that the check is returned. Naturally they contact the Victim 2, the company who's name was used at the top of the check. The company denies all knowledge. If it is a small company, Victim 1 probably won't believe them, and will pursue them with bad check laws, only to find out they never wrote the check.
  8. Unkown perpetrator gets away with paying bills with other's names, addresses, bank accounts, etc.

How to Protect Yourself

  1. Write checks as seldom as you possibly can.
  2. Don't send checks bearing a signature to vendors you don't know. Use a credit card or online bill pay service instead.
  3. As soon as you hear something that sounds like any of the above, file a police report to protect yourself from further action done in your name.

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