Financial institution fraud includes check fraud and wire fraud, with criminals using various methods to obtain money. Banks and customers are turning to electronic transactions to combat check fraud, but this creates the risk of computer-assisted attacks. Wire fraud is often the result of phishing, where criminals send emails with clickable links to fake websites. To prevent fraud, individuals are advised to take precautions such as mailing checks from locked mailboxes and never clicking on links in emails.
The types of fraud in financial institutions are almost as limitless as the number of criminals who commit the crimes. Although the details of each scheme may be different, many of these scams fall into two categories: fraud control and wire fraud. In general, people who commit check fraud use written drafts to get money, and wire fraud exploits information collected over the Internet.
One of the most common types of fraud at financial institutions is check fraud. In its simplest form, this scam is accomplished by altering the recipient information or the payment amount of a legitimately written check. More complicated schemes include check forgery or obtaining blank checks by theft. These types of fraud are generally directed at account holders. Certain other issues, including fraudulent accounts and intentional overdrafts, primarily affect the financial institution.
Many banks have added security measures to protect themselves and their customers from financial institution check fraud, but individuals are encouraged to take certain steps to further protect their accounts. To prevent theft, for example, it is recommended that all checks be mailed and received from locked mailboxes. All fields in a draft must be filled out completely with lines drawn from the end of the writing to the end of the field. It is also suggested to use a blue pen, because it is more difficult to duplicate mechanically. In addition, frequent reconciliation between bank statements and personal records can help identify fraudulent activity and take action against future occurrences.
In an effort to combat financial institution fraud, many banks and customers are choosing to conduct their business electronically. This reduces the possibility of check fraud, but creates the possibility of computer-assisted attacks. Most of the institutes that handle financial information have responded admirably to this threat by creating extremely secure websites. Criminals, however, have responded by attempting to deceive account holders.
Wire fraud at financial institutions is the most frequent result of a practice called phishing. In this practice, the criminal sends emails from people who have clickable links to banks, online stores, or utility companies that the recipients use. However, these links do not lead to the actual websites of the companies, but to pages that appear to be identical to the legitimate sites. After the victim has entered their password information, the scammer can access the victim’s account on the legitimate site. The most effective way for people to combat this type of scam is to never click on a link in an email, but instead visit the website directly or call the business.
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