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#1297980 - 12/03/09 04:14 PM Are we required to release fraud check to customer
Slugbug Offline
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Is it a requirement to give a check that we know is fraudulent (it came with a secret shop letter) back to the customer if they request it? Can we write fraud on it to keep them from negotiating it at another financial institution?

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#1297987 - 12/03/09 04:22 PM Re: Are we required to release fraud check to customer Slugbug
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There is no such requirement that I know of. I believe you have every right to confiscate a fraudulent item, just as you would with counterfeit money. We have always retained fraudulent items. If we knew that the customer was a victim, we usually provide them with a photocopy of the item for their records.
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#1298184 - 12/03/09 06:37 PM Re: Are we required to release fraud check to customer Aggs
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Thank you. That is what I thought, but wanted to make sure I wasn't missing some requirement.

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#1298195 - 12/03/09 06:43 PM Re: Are we required to release fraud check to customer Slugbug
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"I believe you have every right to confiscate a fraudulent item, just as you would with counterfeit money."

I would be interested in the legal theory that supports this premise.
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#1298296 - 12/03/09 07:57 PM Re: Are we required to release fraud check to customer rlcarey
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Originally Posted By: rlcarey
"I believe you have every right to confiscate a fraudulent item, just as you would with counterfeit money."

I would be interested in the legal theory that supports this premise.


I don't think it's anything written in stone, but I do believe it's one of those "best practices" items. Even when I worked for a very large bank in the midwest that was part of our regular procedure regarding fraudulent items. Just as with the other institutions I have worked at... The above statement is my opinion (based on experience) but that's the only way I've seen it done.
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#1298315 - 12/03/09 08:03 PM Re: Are we required to release fraud check to customer Aggs
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There is some pretty good information here:

http://www.icba.org/files/ICBASites/NSPDFs/TipsforCashiersChecks41207.pdf

There is a point made in the article:

"Confiscate, if possible, counterfeit checks brought in by customers."

So to answer your question, I don't think there's anything out there that requires you to release the check back to the customer. It's probably an internal decision, but I don't see any benefit in releasing the original item back to the customer.
Last edited by Agnessa; 12/03/09 08:05 PM.
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#1299051 - 12/04/09 05:41 PM Re: Are we required to release fraud check to customer Aggs
Elwood P. Dowd Offline
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A customer sells a car to someone who pays for it with a fraudulent check and the teller is going to refuse to give the check back, leaving the customer with no proof of the fraud? If the customer is rlcarey or me you just threw a 19 year old teller to the wolves.

Having a policy where the bank retains the check "if appropriate" might work if it's administered by people who know enough to ask the right questions. The bank does not stand in the place of a parent who can confiscate dangerous toys.
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#1299141 - 12/04/09 06:48 PM Re: Are we required to release fraud check to customer Elwood P. Dowd
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I agree. However, am I correct that the FI would most likely be filing a SAR for the fraudlulent check and should at least keep a photocopy of it for their own records (understanding that we don't need to send the photocopy with the SAR)? This way if any follow-up results from the SAR filing the FI has some evidentiary documentation.
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#1299159 - 12/04/09 06:56 PM Re: Are we required to release fraud check to customer Elwood P. Dowd
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Originally Posted By: Ken_Pegasus
A customer sells a car to someone who pays for it with a fraudulent check and the teller is going to refuse to give the check back, leaving the customer with no proof of the fraud? If the customer is rlcarey or me you just threw a 19 year old teller to the wolves.

Having a policy where the bank retains the check "if appropriate" might work if it's administered by people who know enough to ask the right questions. The bank does not stand in the place of a parent who can confiscate dangerous toys.


In your example, I would likely change my stance on it on a per-case basis. But I've never seen anyone actually lose property like that. Most of the scams have to deal with the fake lottery winnings, etc. Customer brings in a check, deposits it (if it gets by a teller), deposits it in an ATM, etc.

So yes, in those cases we keep the original items once we find out they are fraud. The customer is more than welcome to a photocopy. We especially do not hand the check back if the customer brings it in and we refuse to deposit it because we know it's fraud. I am not giving back a fraudulent check to a customer who can then take it to another branch or another financial institution and potentally be allowed to negotiate it.

If the customer would need an original because it was required by law enforcement, that's a different story. But we've never had anyone need anything more than a photocopy in order to file a police report. And most people don't even file police reports because a) they're embarrassed that they fell for or almost fell for a scam; or b) they didn't actually suffer any losses because the funds deposited never left the account prior to the fraud discovery.

Our fraud prevention policy does state that bank employees are to retain the fraudulent item and any exceptions have to be approved by our VP of Fraud Prevention or myself.
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