Thursday, October 25, 2007

Rubber Lottery Checks Bounce High

Terry Thornton, senior vice president of the fraud services department for Comerica Bank in Auburn Hills, MI recently said that two of the most common scams they're seeing with fake checks are for lottery winnings and work at home scams. Consumers receive a check and this looks like something for nothing. Who cares that they never entered the lottery, much less ever heard of it. They're a winner, they're richer, and why question a good thing. The person deposits the check follows the instructions, sending back a part of the funds. This is usually sent through a wire which processes faster than a check. This scam keeps happening because it keeps working.

The National Consumer League, a nonprofit consumer group in Washington, D.C. estimates that the average loss on these scams is $3,000 to $4,000. For many customers, that is a lot of money. Some of the losses are incurred by the customer, and sometimes it passes to the bank. Customers just can't pay. In the eyes of many bank customers, it was the banks fault any way, as they said the check "was good" and put the money in the account.

These scams are at an epidemic proportion. Banks need to educate staff to watch closely and use the rules available to them to protect the bank and the customer. Watch the checks themselves, talk to the customers making the deposits and do all that is reasonable to avoid contributing to the spread of this problem. Remember that a large sample of these letters are available for training from BOL. The letters change periodically, so it is important to keep up. The newest letter example, being added today, isn't a lottery scam, but a refund notice from the IRS. Who wouldn't like to get money back from the IRS? But it is important not to bite. It is a fake.

The FTC has a tip sheet for consumers on this topic, "Giving the Bounce to Counterfeit Check Scams".

Thursday, October 04, 2007

U.K. Card Fraud in U.S. Increases

The U.S. now exceeds France as the number one country where U.K. based credit and debit card losses occur. Fraudulent transactions of U.K. accounts increased 126 percent in the first half of 2007 as compared to the same period a year earlier. 2006 fraud involving U.K. accounts in the U.S. was $34 million. In-person fraudulent transactions fell 11 percent.

In the U.K. the industry has adopted the "chip-and-PIN" technology so that machines used for debit transactions need to "see" the chip in the card and receive the correct PIN, before funds are disbursed. But when that card is skimmed and the PIN is obtained, it can still be used in the U.S. where the chip is not required to complete transactions.

This report is from Association of Payment Clearing Services (APACS) which also reported a 44 percent increase in "card not present" transactions. These are often accounts where the card data is used to purchase goods online or over the telephone. The merchant never has an opportunity to see or swipe the card.

On a related note, The Better Business Bureau in Boise, Idaho reports that consumers are being called and asked to verify credit card information. "The caller or the contactor has enough information, enough real verifiable information to make the contact seem very plausible," says the BBB's Nora Carpenter. The caller then asks the consumer to verify the three digit security code on the back of the card. The code is needed to complete many transactions when the card is not present. The credit card company would have access to this without asking the person they believe is the cardholder. Consumers should be cautious.

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