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Cheque fraud

Any money moved from the account to get clearance against a bad cheque becomes the owner's liability. Cheques are often cleared in 3 to 6 days, and once it is deposited in the bank, the customer may feel they have received the money. Banksare trying to find ways to identify fake cheques before it is passed through the clearing system. 

However, as per law, the banks have to show the deposited funds for withdrawal in a few days, and they are not sure the money against the cheque will be available after six days. Some scammers offer tampered cheques which the bank rejects in later stages. 

There has been an increase in online banking frauds, and banks have asked people to take online account transfer precautions to avoid losses. For example, they should not click on email links that redirect them to fake sites and enter their details. 

Also, use strong credentials and passwords and update details. Finally, check all the bank statements carefully to make sure there are no unusual activities. The criminals' groups can exploit any weakness in money transactions to harm people.

How Does It Happen?

Sometimes the impostor assigns money that appears in your account in a few days of deposition of the cheque, but in reality, the system continues to work to get your payment. 

Funds that are transferred digitally have no credit risk and can be cleared very fast. At the same time, fast payments help scammers get money deposited in their mule accounts to get illegitimate money. 

As per law, the account holder is responsible for the loss incurred in case of loss due to their negligence. The bank is liable if it accepts the forged, improper or altered documents. 

If you make payment through cheque and do not have adequate funds in your account, and you do not hold any other account with the bank to fulfil the demand, the bank can file charges against you. 

How To Protect Yourself?

  • Accept cheques only from people you know and trust. Ask for a different mode of payment if you are not sure of the sender. If you find irregularities in the text or numbers or if the "look or feel" is not proper, you should refuse to take it.

  • If you are writing a cheque, write clearly and put a line through empty spaces.

  • Also, refuse the cheques where you are offered more than the agreed amount. 

  • Some offer bogus cheques that appear authentic but are either stolen or have a fake signature.

  • Some give you a different note or a tampered one, but it may look fine. The bank will reject such documents at some point. 

  • Some criminals make use of disappearing ink which can fade away after some time.  

If you get overpayment, it can be rejected by the bank due to lack of funds and it can provide an excuse to the fraudsters to delay the processing. 

Sometimes, they will ask you to send back the excess money in cash, as their cheque bounces at some stage, and you lose the differential cash. Hence, it would be best if you refused it. 

Such frauds are often connected with bogus job opportunities or ads posting jobs where youngsters are lured into paying for fake opportunities.

Date Published: Feb 03, 2022

Types of fraud

A-Z of fraud

To help understand which fraud you've been affected by, we've categorised them into an alphabetical list.

What is fraud and cyber crime?

Cybercrimes can be of two types. First, it can be cyber dependent, where the fraudsters use online devices to convince the victim to accept their offers.

Advance fee fraud

If you are trying to get a loan for a house or a car, they ask to meet the provider to get the financing arrangement and pay the finder's fee in advance.

Corporate fraud

Corporate frauds can be complicated, committed either by the firm or an individual. Nevertheless, it mostly involves cheating where the employee or the firm.

Individual fraud

There are many types of individual frauds related to advance fees, investments, insurance brokers, bogus tradespeople, Ponzi schemes, pension liberation.

Online fraud

Hence the number of cases of online fraud is increasing each year, and most such cases include – account takeover, direct frauds, or scams related domain names.

Identity fraud and identity theft

The criminal uses the stolen identity of another person living or deceased to conduct unlawful activities like obtaining goods or services in another's name.
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