CONTACT: William E. Philbrick, CPA, MST, CVA, CFF Greenberg Rosenblatt Kull & Bitsoli, P.C. 508-791-0901 wphilbrick@GRK&B.com

Being vigilant will help protect your cash

William E. Philbrick, CPA, MST, CVA, CFF

According to the American Bankers Association 2009 Deposit Account Fraud Survey Report check-related losses exceeded one billion dollars in 2008, up slightly from the $969 million reported in 2006. One significant threat is check washing, a low tech way to alter a check you have written, but it’s easy to minimize the risk through some simple steps.

The check washer begins by obtaining your check, usually by theft from neighborhood delivery-and-collection-box units by prying open locks or removing entire units from their metal anchor, stealing mail left in unsecured mailboxes, or waiting until U.S. Postal Service collection boxes fill up on weekends, and then reaching inside to retrieve letters that haven't dropped down.

Washing a check is a fairly simple process, and checks that lack appropriate security features and are written in standard ballpoint or felt-tip pen make prime candidates for it.
The check washer removes or alters the payee and/or amount. Often, only the payee is changed, allowing the check to pass by unnoticed when balancing your bank statement.

Many banks and merchants have developed procedures to protect against such frauds. For example, banks may require persons who are not bank account customers to affix their fingerprints to the face of each check they cash. If the check turns out to be a washed check, there is trace evidence. Tellers and clerks generally receive training to spot distinguishable characteristics of washed checks. The training is only effective to the extent it is practiced.

There are a number of steps you can take on your own to minimize you’re your risk.

• Minimize the number of checks you write. Pay bills online using a secure computer. Use a credit or debit card for purchases and bill payments. Set up automatic payment plans with creditors.
• Only use checks that contain security features, including security ink and chemically sensitive paper. Also, do not have your driver's license or Social Security number printed on your checks.
• Use pens containing indelible black gel inks that can’t be easily removed with water or chemicals. These special gel pens are readily available at office supply stores.
• Never use an unlocked mailbox for incoming or outgoing mail.
• Don't put mail in a mailbox overnight or drop it off for pickup on a weekend. Make sure that any mail deposited into a box actually drops down into the box so that no one can reach in and remove it.
• Strictly monitor your bank account activity. Review your bank activity for suspicious transactions as often as possible. Through online banking, you can view most transactions in real-time. View the front and back of cleared checks to verify that both the amount and payee are what you intended.
• Reconcile your bank account statement monthly and address any discrepancies, keeping in mind that most financial institutions will only accept fraud claims within 30 days after a statement has been mailed.
• Don’t leave blank spaces on the payee or amount lines.
• Retain only copies of cancelled checks you may need for documentation purposes and shred originals.
• Follow up on any suspicious or unusual calls and/or notices you receive concerning any payments you have made by check.

In the unfortunate event you become the victim of check washing, take the following steps:

• Report the crime to police, and obtain a copy of your police report and case number.
• Notify your bank, place any necessary stop payments, close compromised accounts, and request a refund of lost funds.
• Notify in writing any vendors or merchants that may have accepted a washed check from your account. Include copies of the police report and notice from your bank that the account has been closed.
• Request confirmations from any vendor or merchant involved that state that you are not responsible for the charges, and retain them for at least ten years.
• Contact each of the three credit reporting bureaus—Equifax, Experian, and TransUnion—and request that they place a fraud alert on your account.