Fraud in auto check clearing; Names are being erased with chemicals: Big flaw in fast clearing system, change in color and handwriting difficult to detect.

According to experts, in the new age banking, the automated processing systems of banks clear checks very fast. This feature is proving to be a weakness.- Symbolic photo

An old scam has returned in a new and dangerous form in America. Fraudsters are erasing the name and amount written on the check with chemicals and passing it off as their own. Due to this, check fraud cases have reached record levels.

The FBI and the US Postal Service have issued a warning appealing to people to adopt digital payments instead of paper checks. Fraudsters erase the information written on the check with common household chemicals like acetone or bleach and re-issue it in their name. This method is no longer limited to personal checkbooks only, checks related to government facilities like business payments, tax refunds and social security are also the target of fraudsters.

The incident that happened with a California couple shows the seriousness of this scam. The couple received a notice from the IRS that they had not made a quarterly tax payment of $12,000 (Rs 11.3 lakh), even though their Chase bank statement showed the check cleared. Later, on looking at the scanned copy, it was found that the name of IRS had been erased from the ‘Pay to the Order’ line and the name of some other person had been written.

The couple complained to Chase Bank, but the bank initially refused to help, saying that the deadline for reporting the fraud had passed because the check had been stolen and deposited a year earlier. The responsibility for loss after exceeding the prescribed time limit under the bank’s deposit policy and legal regulations generally falls on the customer.

But after pressure from the couple and the matter coming to light, Chase Bank started the investigation again and traced the fake account to which the stolen money was sent. There were still about $11,000 (Rs 10.4 lakh) left in that account. Due to this the couple got almost the entire amount back. Bank spokesman Jerry Dubrowski said he was satisfied the matter was resolved and advised customers to avoid sending checks in the mail. Be sure to check your bank statement every month.

According to experts, in the new age banking, the automated processing systems of banks clear checks very fast. This feature is proving to be a weakness. In the auto curing system, irregularities like check tampering, change in color or mismatch in handwriting are not detected. Fraudsters are getting direct benefit from this.

Due to easy fraud, check fraud cases in America increased by 2,000% in 13 years.

Check fraud complaints in America increased from 3.5 lakh in 2021 to 6.8 lakh in 2022. High-volume mail theft cases are expected to increase from just 2,200 in 2010 to more than 49,000 in 2023, an increase of nearly 2,000%. According to Frank Albergo, President of the Postal Police Officers Association, this is now the era of organized postal crime. FBI and Postal Service advise to use e-check and digital payment instead of cheque.

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