Amy Heaslet, Executive Vice President/General Counsel, Tennessee Bankers Association
A top concern of bankers these days is fraud—both check and elder fraud—as the frequency and sophistication of these crimes continues to evolve. In fact, it’s more common than not for bankers to have stories of check fraud in significant amounts or heart-breaking examples of elderly customers being taken advantage of.
Last year banks issued nearly 680,000 reports of check fraud to FinCEN—up from 350,000 reports in 2021. Unfortunately, this is another fallout from the pandemic as many criminals began targeting government relief checks. And the problem has only gotten worse.
Although there are many forms of check fraud, one of the most common is checks being pulled from the mail and washed, with the payee and amount being altered. It’s not unusual for checks to be changed to $100,000 or more.
Encouraging customers to consider using alternative forms of payment other than checks, like ACH, and discouraging sending checks in the mail are a good place to start in combatting check fraud. ACH, however, isn’t fool proof. Another common scam tries to re-direct ACH payments to criminals. The best defense is to be diligent when sending large sums and strictly adhere to your bank’s security procedures to ensure it’s going to the proper payee.
Another tool for banks is implementing Positive Pay for commercial customers. This is an automated system that screens for fraudulent activity by comparing details of a presented check with the check originally issued. If a discrepancy exists, the check will be sent back. Some banks are even including in their account terms that if this is available to customers and they decline to use it, the customer may be responsible for a loss if it could have prevented the fraud.
The Federal Reserve also recently launched FedPayments Reporter Service for Check Services that enables banks to provide additional layers of fraud detection to both business and consumer accounts by allowing early review of check details. And the ABA has launched a Check Fraud Claim Directory that provides contact information for fraud personnel at each participating bank. This directory (available to ABA members and nonmembers) could provide critical information when trying to find the best contact at a bank of first deposit of an altered check.
By taking these steps and implementing these tools, you can elevate your bank’s ability to combat check fraud and provide greater security for you and your customers.
When it comes to elder fraud, recent reports indicate that criminals steal an estimated $28.3 billion from older adults each year, most of which is by caregivers and family members. New scams, however, continue to emerge, like using bitcoin ATMs to convince the elderly to deposit their funds in cryptocurrency only to find out the digital wallet they created belongs to a criminal. There are nearly 70,000 bitcoin ATMs in the country and older adults’ lack of knowledge about crypto makes them an appealing target for criminals.
TBA’s team is dedicated to working legislatively to combat elder fraud. It began in 2017 with passage of legislation to pause transactions, refuse to accept acknowledged powers of attorney, and notify close family members if elder financial exploitation is suspected. We are now working with a coalition of agencies to create a TBI-hosted hotline for financial institutions to report elder exploitation and fund new positions for investigators dedicated to crimes against the elderly.
One of the more challenging aspects of elder fraud is that once the money leaves the customer’s account, it is difficult to get back. This legislation, if passed, will create immediate access to investigators to help intervene when a customer is being exploited, which could mean the money is recoverable or never leaves the customer’s account.
TBA also hosts quarterly roundtables through Zoom for bankers to discuss scams and best practices and hear from industry experts. Please let me know if you would like to participate.
Whether you’re seeing check fraud or elder financial exploitation, know that you are not alone. I would be happy to provide you with additional resources should you find yourself navigating these issues.
