Check fraud is on the rise, at least in the US
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ThatPlace928
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I have one customer who I do bookkeeping for at the end of each quarter that sends a check the next morning, after my invoice arrives. He sends it via Deluxe Checking online. I simply send it to my business PayPal account, it's that easy.
Customers who pay cash get a discount of 5%, if they buy a laptop from me. No discount for paying by credit card but no fee either.
For repairs, I collect a service charge on top of the repair if they use a credit card, because I don't discount parts and labor. Most of the time, the service fee is only $5 and customers don't mind paying it.
Except for my bookkeeping client, I don't take checks at all. Too easy for people to get what they came for, then cancel the check. My collections days are way in the past.
Agh, this stuff is so rampant here, I've pretty much dropped taking checks now, I added Zelle and have paypal and take credit cards but I tack on the fees for them. If they don't want to pay ithem I request cash which doesn't seem to bother them them usually, I always tell them before pickup the balance due.Not sure about other countries. Link below to an unlocked article about this in todays digital WSJ. This happened to a customer of mine last year. They had a check stolen, after it had been mailed, which was for around $400. Whoever intercepted it altered the check to over $40k and deposited it out of state and then was able to withdraw the money very quickly. Fortunately for them they are very good record keepers plus their GL policy included coverage for fraud. Got their money back in under a week.
High-Tech Banks Grapple With a Rise in Old-Fashioned Crime: Check Fraud
Banks are working to reimburse victims more quickly, but recouping funds is complicated.www.wsj.com
Sky-Knight
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Honestly this is the only way.
Checks are inherently insecure, all you need are the numbers at the bottom of any check to draft whatever you want out of a checking account. There is no security, no authentication, NOTHING but number match and move funds.
That's why this nightmare continues, and the only way to protect yourself is to simply never put your account and routing numbers into the wind. IE, never write a check... ever.
britechguy
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I have had only one client ever who uses Zelle, and I looked into it, but there are a number of problems with that service. I know I posted an article out of the New York Times (I think, it's been a while) on Zelle and based on the fact that there is no way to reverse a transaction, it's a big, fat "No," for me.
I have PayPal for eBay use, and on the very odd (I think there have been 3 times in over 10 years) someone wants to pay me that way I just have them use that PayPal account.
Checks are still fine by me. I've never had a single one bounce from a client since 2008, when I opened up shop. I can use my smartphone to mobile deposit them with almost instantaneous effect (for most jobs, anyway - my credit union only holds back funds for high-dollar checks).
Genuine question - how is it possible to lose funds just by giving out these numbers?
My suppliers freely give their their account details to me, and I have always freely given my account details to my customers. Never had a problem.
Please tell me what I'm missing.
ThatPlace928
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In the wrong hands, those numbers can be used to make online purchases any place checks are accepted online, quickly draining bank accounts and doing some major damage.
ThatPlace928
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Zelle and Venmo are what most online scammers use, because all they have to do is report fraudulent use on their account and the payments they made can be easily reversed out of seller accounts. There's no way to fight chargebacks from these two, from what I understand, and no amount of proof will get your money back.
I quit using brick and mortar banks about 14 years ago. Blue Vine is a great online bank and Chime is the absolute best online card that also provides checking account and routing numbers for those rare times you actually need one. Chime doesn't have a business card yet but the personal card works just fine.
britechguy
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No, they can't. There are verification steps, usually multiple verification steps, before any entity will accept an account and R&T number as a means to ACH funds. And the financial institutions have guardrails on, too.
I suggest you try setting up any one of your credit cards for direct debit payment from your financial institution to see just how many steps are required, on each side, before those funds can be moved. After it's in place, it is truly pretty much "automatic," but getting it in place involves non-trivial verification before a financial institution will either accept deposits or withdrawls from an account.
Banks are notoriously risk averse. And they're even more risk-averse when they could be "out of pocket" to reimburse a customer when they allowed funds to be transferred out of an account where that was not very clearly authorized in advance.
It's a fantasy that someone can just present account and routing and transit (R&T) numbers and empty a bank account, no questions asked. MANY questions get asked prior to the first cent moving from one place to another.
[And I'd love to have examples of where any online store will allow you to just enter your checking account information for a purchase. I've never encountered one of those in my entire adult life. It's credit, debit, or online pay services only.]
ThatPlace928
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I'm sure there are much tighter controls in place now, as opposed to years ago. Maybe it's not as bad as it used to be but I still see websites taking checks, when I search for parts. I don't set up automatic payments for any monthly bills. I've done it in the past and have ended up with unexpected charges, some of them quite large, and never saw my money again.
Blues
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While it is difficult with simply the Routing and Account number damage can be done however anyone you give a check to automatically has this or if a check is sent via postal service and stolen the thief now has that. More often people are going to wash a check and change the amount on it or something simpler than attempt to access the account more directly. I can say I know of this happening within the last 5-7 years where account and routing were acquired, most likely through stolen check via mail, and fraudulent activity begin the upside being this account was fairly actively monitored and primarily used for singular transaction types so it was easy to spot the fraud and caught quickly the account was simply closed and a new one reopened to close the hole and processes were reviewed to tighten up security of information including electronic data storage and adding the MICR line on checks to redacted data in policies around data retention.
britechguy
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There are still many vendors who will accept checks, real, physical checks (as well as purchase orders) as means of payment. I don't now of a single one that will allow you to enter an account and R&T and away you go. Never have.
Often those who accept checks will hold shipment until payment clears, too. In the modern world of check processing that's not too terribly long (on the order of hours to a business day).
Sky-Knight
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All you have to do is print a check that looks official enough with the numbers at the bottom, and deposit it.
I've been victimized by this multiple times. There are NO CHECKS to stop drafts from exiting your checking account when you have checks in the wild.
Now, that being said... image based verification does make a log of it. So if your bank is worth a crap, they'll notice it's fraud and return your cash in short order. BUT that has limits! And if you hit one, you might be waiting weeks.
For this reason, I tell everyone that asks... if you want to be able to publish your numbers so you can accept ACH transfers... publish numbers to a SAVINGS account. People will still use those numbers on fake checks, but they'll auto bounce. You can't draft from a savings account.
britechguy
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When is the last time you handed a check to a bank (or credit union) teller? They're immediately fed through a reader that looks for the special, magnetic MICR ink. This is not something that any average household has access to (though it can be obtained) and not even many criminals have access to (hence the reason that check washing - which is literally washing the originally written words off the check and filling it out again - is still a very popular technique).
You can't even give a check to a grocery store where it's not run through a MICR/magnetic ink aware scanner.
You never stop overblowing risk, about everything. While the world is a place where you need to be paying attention, it's not the kind of "danger at every millimeter of your path," cyber or otherwise, that you like to paint it.
Sky-Knight
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Those scanners aren't looking for anything magnetic, and the checks I have from two local banks, and two local credit unions are the same... 100% paper. All those scanners do is read the numbers off the bottom of the check, and the amount out of the box.
But even if the scanner has the ability to detect the special ink, it's still defeated by an optical scan done by someone's mobile phone.
Your inability to actually accept actual risk is absurd, and frankly I'm tired of you being so preachy about it. I've been victimized by this BS multiple times over my life, and had to make massive changes to the way I process funds as a result.
One of us has zero experience handling actual transactions from over seas in actual bulk, and it's not me. You've been lucky! And that's not a bad thing, but your refusal to accept reality is another thing entirely.
Check processing is nothing but risk. We're all vastly better off swapping to ECH, Credit Cards, or heck even Venmo. These services all have more security baked in than a simple paper check does.
I stopped accepting personal checks two decades ago. The clients I have left still pay me by check, and that's only because I call them when the mail is even a day late. Two of those clients is doing Chase Bill pay now, which randomizes the numbers on the checks to a degree, to prevent this abuse. But a normal checkbook? Has no such protection. Note, I'm not talking about hitting the CCs, I'm talking about hitting the accounts those CCs are attached to!
This is how easy it is: https://www.hashemian.com/tools/check-generator.php
And yes, I've had some really bad forgeries find their way to my checking account over the years. Sucks too because the only thing you can do is open a new checking account, get new deposit stamps, move the funds, new check cards... huge mess.
Wait until everyone realizes that when you sign up for direct deposit, you've also signed up for direct withdrawal! Because that's a thing too! Though that means a bank usually is stealing from you... extremely unlikely. But the system does have that weakness AND there are people that setup merchant processing firms, process VISA cards for a year, then hit all the accounts they've logged and vanish.
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britechguy
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Check processing involves risk. And, overall, that risk is low.
I do very little actual check writing myself, but I still accept them. If I could go "all electronic" I would gladly do so, but that's not reality.
What I accept is that things are as they are, and that hand wringing about "nothing but risk" in accepting checks is hyperbole of the very worst sort. I can't even imagine how many millions of checks are processed daily, and have been for the entire 61 years I've been alive, without incident. Scams are the exception, not the rule.
It is you who refuses to accept reality, on a continual basis, and who overblows risk routinely. That's your problem, not mine, and someone has to be the voice of reason and calm. That someone is definitely NOT you.
Sky-Knight
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@britechguy The only reason the system functions is due to it being subsidized by the US taxpayer via FDIC insurance, and other anti-risk measures banks pay for also called insurance.
This injects measurable inflationary pressures into our monetary system... something that we all suffer from daily. But by all means! "The risk is low".
OK Boomer, vaccines cause cancer, global climate change isn't real, and your entire generation isn't suffering from lead poisoning.
This injects measurable inflationary pressures into our monetary system... something that we all suffer from daily. But by all means! "The risk is low".
OK Boomer, vaccines cause cancer, global climate change isn't real, and your entire generation isn't suffering from lead poisoning.
Porthos
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Back in the day, I printed my business checks on my plain ole laserjet printer. NO special, magnetic MICR ink. I printed a few at a time and they were kept in the safe.
All the banks accepted them with no question.
All the banks accepted them with no question.
Blues
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@britechguy most any Laser Printer you can find a MICR toner for them.
I will say however simply printing and cashing/depositing a check is dangerous as often you need and account or they require photo ID to cash the check. This means you would need to invest more in other fraud to plausibly have any hope of getting away or be long gone before the fraud was discovered and be wanted for fraud & theft after discovery.
I will say however simply printing and cashing/depositing a check is dangerous as often you need and account or they require photo ID to cash the check. This means you would need to invest more in other fraud to plausibly have any hope of getting away or be long gone before the fraud was discovered and be wanted for fraud & theft after discovery.
britechguy
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Key words. Banking regulations have changed over the years. What's required of a check itself has changed extensively since I was a small child.
There was a time where checks were essentially just printed on check paper, with no other requirements at all. I'm old enough to remember when MICR (Magnetic Ink Character Recognition) "became a widespread thing."
The advent of mobile check deposit makes it possible to attempt to deposit a check sans any MICR checking. But there are controls over mobile deposits that don't exist for in-person ones.
https://www.fdic.gov/regulations/ex.../insights/sisum09/sisummer2009-article02.html
All things in banking are pretty highly regulated.