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chapter 4 check fraud types of check fraud checks are subject to forgery and fraud because they are physical items that can be altered easily checks remain the type of payment most vulnerable to fraud attacks which accounted for 37% of the fraud committed against bank deposit accounts and remain responsible for the highest dollar amount in fraud losses according to Ernst & Young more than 500 million checks are forged annually with the losses totaling more than 10 billion dollars in the United States alone and the average fraud scheme lasts 18 months before it is detected methods used by criminals to obtain financial information include stealing financial institution information checks statements receipts and getting consumer information from merchants insiders and bank employees according to research by the Association for financial professionals the most prevalent check fraud method is counterfeiting by altering the MICR line on the check other methods of counterfeiting checks included using a fake company name altering payee names and altering dollar amounts forged signatures or endorsements drawn on a closed account banks are bound by the regulations of their home country historically the responsibility for detecting forgery has been placed on the bank there are several common types of check fraud forgery forgery can take place a number of ways when an employee issues a check without proper authorization criminals will also steal a check endorse it and present for payment at a retail location or at the bank teller window in addition the criminal may also use forged personal identification counterfeiting and alteration counterfeiting could either mean wholly fabricating a check using readily available desktop publishing equipment consisting of a personal computer scanner sophisticated software and high-grade laser printer or simply duplicating a check with advanced color photo copiers alteration primarily refers to using chemicals and solvents such as acetone brake fluid and bleach to remove or modify handwriting and information on the cheque when performed on specific locations on the cheque such as the pay's name or amount it is called spot alteration when an attempt to erase information from the entire cheque is made it is called cheque washing paper hanging this problem primarily has to do with people purposely writing checks on closed accounts as well as reordering checks on closed accounts they may do this on their own account or on the closed accounts of others cheque hiding check kiting is opening accounts at two or more institutions and using the float time of available funds to create fraudulent balances this broad has become easier in recent years due to increasingly competitive banking practices it has been estimated that the annual losses due to cheque fraud are in the billions of dollars and continue to grow steadily for the consumer the amount of inconvenience and anxiety caused by resolving problems with the account local merchants as well as possible repercussions with credit bureaus can be considerable now that you have a good understanding of check forgery and fraud let's discuss...