Check fraud getting high tech

Creating a bank check that looks real enough to fool a teller is, apparently, quite easy to do. Hundreds of scammers already know this, and the public is slowly beginning to learn -- many times, the hard way.

A crime involving paper seems old-fashioned in an age where financial fraud is increasingly high tech, but thanks to advances in home printing tools, experts say, check counterfeiting is on the rise. At least seven Washington banks were victims this year, and issued alerts about fakes in circulation.

"It's always been an easy avenue for criminals to get money. The way they do it has changed," Bellevue police Detective Michael Chiu said. "It used to be they would steal checks from the back of a business' checkbook. Now they are actually fabricating the checks. ... There's a lot of check fraud going on out there."

What makes the problem especially unnerving, according to the Federal Trade Commission, is that just because a check has been deposited and the receiver has access to the funds doesn't mean it was valid. Once people figure out they were duped, the money is usually long gone.

Because a bank guarantees them, cashier's checks used to be as good as gold, valid as cash. Not anymore.

Bellevue-based First Mutual Bank issued an alert in July to report that counterfeit cashier's checks bearing the name, "First Mutual Savings Bank" were in circulation. The fake checks looked valid, but were not exact copies of the real checks.

In the following weeks, First Mutual learned of about two-dozen more cases, said Robin Carey, executive vice president of administration and operations.

"We found out about this by getting a phone call from someone back East that was in a bank where they had the check deposited," Carey said. The bank sent a copy of the check.

"We said, 'Nope this isn't good, this is definitely a counterfeit.' "

One of the cases involved a high school girl who had responded to an e-mail, Carey said. The girl was told to deposit a check and then wire the sender part of the money.

"It's basically a too-good-to-be-true scam," Carey said. "You can just never let your guard down."

Because the checks were identified before they were cashed, the bank didn't notify law enforcement, Carey said.

The reported crimes usually fall to the police to investigate, but their hands are often tied, especially when the white-collar crime crosses jurisdictions.

"We can only investigate so many and we do try and investigate the big ones or the ones where there are solid leads," Chiu said. "The ones where there is no suspect information and the amounts are small, that's up to the financial institution and the victim to cover."

Next month, Chiu plans to begin presentations for local banks and their clients to teach them how to prevent fraud.

Customer awareness is increasing, said Kathy Rose, security officer for Everett-based Frontier Bank. A common reaction to the crime is anger.

"They get mad that the fraudsters are out there," Rose said. "They're frustrated that it's hard to put a stop to it."

Her bank issued an alert in April about fake cashier's checks that had appeared on the East Coast. The bank has had its checks counterfeited twice, both times by scammers in Canada, she said. The bank told the U.S. Postal Service and Canadian authorities.

Rose holds a simple theory on why the problem is increasing: It's easy. "Creating fake checks that look really, really good is a lot easier than creating fake money that looks really, really good," she said.

It's much easier today to fake a check than in the time period of Leonardo DiCaprio's character in the film "Catch Me If You Can," said David Barr, spokesman for the Federal Deposit Insurance Corp.

The federal agency's cyberfraud and financial crimes section sends out daily alerts on behalf of banks that have reported known fake checks.

Fake checks do not have to mirror a real one to fool a teller -- many fakes contain security features such as watermarks and translucent ink. Fake checks also can contain real routing numbers, but fake account numbers, which slows down detection.

"Any junior high school kid these days probably has the technology to make a counterfeit check," Barr said.

The Washington Bankers Association also has an internal alert system shared by banks and law enforcement, said Jim Pishue, the association's president and chief executive.

"Obviously, check fraud is a huge issue for banks and for retailers," he said. "We rely on the federal authorities and so on and the bulletins to release that information as soon as they can, so banks can be aware of it."

But people shouldn't lose faith in checks altogether, Pishue said. "Of the millions and billions that get distributed every day, there's only very few that are fraudulent or counterfeited."

SCAM ALERT

Check counterfeiting is getting worse and is used, most of the time, to dupe someone into providing money.

Beware of these schemes:

• Lotto winnings: A letter congratulates you on winning a lotto or sweepstakes that you never entered. Enclosed is a cashier's check to cover your initial costs (taxes and fees) to obtain your winnings. The instructions tell you to deposit the check, keep some portion and wire the rest to a foreign account. Days later, you learn the check was invalid, and your account is debited the wired amount.

• Overpayment: You are selling your car or something else over the Internet, on eBay or even in person. Someone sends you an official check to pay you for your goods, only the check is for more than the asking price. The scammer feigns an excuse and asks you to wire back the difference, and you do. By the time you find out that the check was invalid, you've lost the money you sent, plus your goods. This is also done with apartment rentals.

Sources: National Check Fraud Center, FDIC, Frontier Bank