Identity Theft and Your Checkbook
Although the loss of a debit or credit card is widely considered one of the most dangerous threats to your identity, it’s actually your checkbook that poses the most danger. If you lose your debit or credit card, you can typically resolve the problem by simply reporting it lost and having it canceled. The loss of a check is a much different story and it’s something that could financially haunt you for years to come. With so many different forms of check fraud and so little federal protection for paper transactions, you have a potential nightmare on your hands. Here’s a look at the different types of check fraud out there and you can avoid them.
Types of Check Fraud
- Account Takeover: Just how it sounds, account takeover refers to a thief gaining one’s bank account information in order to add themselves to it or change its settings.
- Forgery: This type of check fraud occurs when legitimate checks are stolen and then signed for by another person.
- New Account Fraud: Some criminals have turned to creating new bank accounts under stolen identities instead of stealing current accounts. With the new account, they write several bad checks then dump it before getting caught.
- Paperhanging: This common crime refers to writing checks against a closed bank account.
- Counterfeiting: Typically, check fraud counterfeiting is the act of making illegal copies of another person’s checks.
- Alteration: Alteration occurs when someone takes a legitimate check and changes the payee or the amount to be paid.
How to Protect Yourself
- Of course, the best method to avoid check fraud is by not using checks at all! Pay all of your bills online through a secure connection and only shop using cash or debt/credit cards.
- Don’t carry your checkbook around you. Simply keep it locked up in a secure place and take one out when you need it.
- Frank Abagnale, perhaps the most well known check fraud artist of all time, claims you should only use gel pens when writing checks. They resist the use of chemicals, which can help prevent alteration.
- If you do become a victim of check fraud, always report the crime to the police immediately. They may not be able to do much in solving the crime, but it can go a long way in getting your money back from the bank.
