Copyright held by The John Cooke Fraud Report. Reprint rights are granted with attribution to The John Cooke Fraud Report with a link to this website.
In 1994 Congress requested a Fed survey on the prevalence of check fraud. The results of the ensuing survey were released in late October.
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The approximate number of fraudulent checks written in 1995 was 529,000.
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Institutions lost an estimated $615 million on fraudulent checks in 1995.
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Thrifts were hardest hit – 72 percent reported bad check losses. Banks reported 57 percent and credit unions reported 53 percent.
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Nearly 75 percent of the fraudulent checks were drawn on local banks.
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Most reported instances involved consumers writing checks on their own personal accounts.
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Least likely to be counterfeit: Government checks, money orders, certified checks.
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Even though the Expedited Funds Availability Act (EFAA) requires banks to make local funds available in two days and out-of-town funds available in five days, only 48 percent of local checks and 84 percent of out-of-town checks cleared within that period of time.
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The best way to combat check fraud lies in employee training, a faster check-clearing system and increased communication among banks.
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Fraud prevention spending:
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Big banks – one quarter spent more than a million dollars.
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Medium banks – Eighty two percent spent less than $250,000.
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Small banks – Nearly three quarters spent less than $10,000.
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