Bank fraud involves illegally obtaining funds from a bank or financial institution through deception, including check fraud, identity theft, embezzlement, and document fraud. Prevention methods include strict identification policies and careful review of check history. Identity theft-related bank fraud is a growing problem in the internet age. Embezzlement and document fraud are also common forms of bank fraud.
Bank fraud is a serious financial crime that involves the illegal obtaining of funds from a bank or other financial institution. Bank fraud cases are generally distinguished from outright bank robbery in that they rely on the use of deception and confidence tricks rather than the threat or use of violence. Bank fraud cases come in many different forms, including various types of check fraud, identity theft, embezzlement, and document fraud.
Many cases of bank fraud involve the theft, forgery, alteration, or misuse of checks. The simplest form of this type of fraud may be check theft, where the criminal steals someone else’s checks and then uses them to make purchases. Criminals can also use forgery to alter checks they receive for a transaction, for example, changing a $20 US dollar (USD) check into a $200 check by adding a zero. Merchants can help prevent check fraud by instituting strict identification policies that ensure that a customer cannot use a check that is not verified by identification; Consumers can also help stop such fraud by carefully reviewing their check history to make sure all checks match receipts.
Check fraud can also be carried out by the rightful owner of the checks. Check kitting, or passing bad checks, is a type of bank fraud that involves writing checks despite knowing that there are insufficient funds in a bank account to cover the purchases. The frequent occurrence of this form of check fraud is the reason why many businesses only accept checks up to a certain amount in USD, and why many financial institutions charge a high fee for bad checks.
Identity theft-related bank fraud cases are a serious and growing problem in the Internet age. With so many transactions taking place online, thieves and hackers can often access the bank account and credit card information of unwitting consumers. Scammers can also use obtained names and addresses to apply for fraudulent accounts, credit cards, and loans.
Embezzlement occurs when a bank worker steals funds from clients or from the bank itself. Banks rigorously guard against embezzlement in a number of ways, as this type of bank fraud can be extremely damaging to an institution’s reputation. Bank fraud cases involving insider theft are usually handled by people with considerable power within a bank branch, as they have the most access and opportunity and are generally perceived as trustworthy.
Document fraud involves creating false documents to help a scammer get a loan or open an account. Documents that may be fake include identification cards, property deeds, references, or asset statements from other institutions. Scammers can use these documents to open accounts with assumed identities or to receive preferred rates and account options. In some cases, the criminal will attempt to obtain a loan using false names and false documentation, then “disappear” after receiving the funds, leaving the bank with a serious loss.
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