In the second article in a series on bank fraud, Charlene Clayton takes a
closer look at cheque fraud and gives you some advice on how not to become
a victim.
The best safeguard you have against being a victim of cheque fraud is not
to use cheques at all.
Charles Whyte, chief inspector, internal audit at Standard Bank, says there
is no reason today why you should be using cheques when you can easily
transfer money into somebody else`s bank account.
If you choose to continue to use cheques, do everything you can to minimise
fraud, but remember that you cannot eliminate the possibility of it
happening to you.
Bob Tucker, chief executive of the Banking Council, says the banking
industry was not winning all of its battles against crime, particularly in
the areas of fraud and ATM crime. He estimates that the industry is losing
up to R4 billion a year to fraud.
In 1998, banks lost R151 million on cheque fraud alone. Last year, the
police opened 59 515 commercial crime dockets involving a potential loss of
R4,6 billion. More than 84 percent of these were for fraud, he says.
Eugene Drotskie, of Nedcor, says 173 000 cheques were lost last year, many
of which were stolen.
Liability
Charl Cilliers, the Banking Ombudsman, says banks have a duty to ensure
that a person opening an account has proper identification. Before an
account is opened, full details on the new account holder should be
recorded and confirmed.
Whyte says this is not easy because getting a fictitious identity book on a
street corner is very easy.
Bank officials cannot always distinguish between a fake identity book and
the real one.
For instance, they have no way of knowing that another photograph has been
pasted into a stolen identity book.
In Britain, banks insist on two forms of identity before you can open a
bank account: a passport or an identity book; and two forms of proof of
residency, such as an electricity and a telephone account.
As the law stands at present, if somebody gets hold of one of your cheques
and forges your signature, you are safeguarded under normal circumstances
because the bank takes responsibility for the loss.
But you should never give anybody a blank, signed cheque. If this cheque is
lost or stolen, fraudsters can raid you account and you will have no
recourse.
Common cheque fraud techniques
* Fraudulent signatures. Signatures are forged and other details are
altered, sometimes so skillfully that even bank officials are taken in.
* Stolen blank cheques. Sometimes cheques are removed from a chequebook
before it is issued to the customer by the bank.
* Cheque tampering. This is where the details on the cheque are altered to
the benefit of the fraudster. So the payee may be changed from ABC from ABC
Social Club and the amount may be altered by adding on some zeros.
Tips:
* Do not use cheques to make payments when you can do so electronically;
* Do not issue blank signed cheques and never leave signed cheques in your
cheque book;
* Check that there are no cheques missing from your new cheque book when
you collect it;
* If you are paying by cheque, deliver it personally - many cheques are
stolen in the post or in the postal offices of companies;
* Use ink that cannot be erased. Never use pencil - it is easy for somebody
to change the name of the payee to themselves;
* Check your bank statements every month and query any discrepancies in
writing. The sooner the bank picks up fraud and sooner it can stop it;
* Keep you cheque book in a safe place - your unlocked office drawer is not
safe; and
* Don`t let anybody get hold of your ATM personal identification number.
Filling out a cheque
* Start writing out your cheque against the left hand margin. Don`t leave
spaces where additional words or figures can be filled in;
* Write out the name of the payee (the person/company you intend paying) in
full;
* Write the amount in words, not leaving large gaps in between the words;
* Write the amount in figures up against the rand sign and indicate the
cents with zeros or draw a line after filling in the rands;
* Sign the cheque and countersign any corrections you have made.
* Cross the cheque and use the words "Not Negotiable" or "Not
Transferable".
Crossing a cheque means it has to be paid into an account and cannot be
cashed over the counter. To be doubly safe you can use both. You should
note that when you use the words not transferable it means the cheque can
only be paid to the person or company whose name is reflected on the
cheque. More importantly, the name on the cheque must be exactly the same
as the name of the company`s bank account; and
* Sign your cheque properly and try to be consistent with your signature