Are those digital checks you can download from your online bank putting your money at risk? Perhaps. Old-fashioned check fraud, supercharged by online account hijacking, is the latest fraud headache, I learned at the Visa Security Summit in D.C. on Wednesday. Some are calling it check fraud with “digital fine tuning.”
Criminals are having a hard time turning hijacked online bank accounts into cash because banks are doing a good job with back-end fraud controls. Banks notice money being moved to unusual places, and block the transactions. So criminals are combining online and offline methods in a creative, and bold, way.
According to a fraud investigator at a major bank who spoke to me on background because his firm won’t let him speak publicly, criminals hack into a consumers’ bank account, but don’t attempt to steal in the expected way — by initiating an online transaction. Instead, they download high-resolution copies of canceled bank checks which they use as a base to creative fraudulent checks for deposit. Because the criminals have already impersonated the victim, and know a lot about him or her, it’s easier to walk into a branch and turn that fake check into cash. I’ll stop with the details right there.
It’s a bold crime. Bad guys have to walk into branches — or use drive-throughs– to pull it off, meaning their image is probably on camera. It’s also decidedly low-tech, a bit like the old Frank Abignale Catch Me If You Can days. But as any fraud analyst will tell you, stopping financial theft is like squeezing a water balloon — squeeze one form of theft, and criminals just slide to another. As banks focus on online fraud controls, criminals go looking for other points of weakness, and they’ve found a new one.
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What does this mean for you? It’s all the more reason to carefully guard your online bank account user name and password. Also, if you get a warning that someone has mysteriously logged onto your account from an unexpected location, don’t blow it off just because no money is missing.