Few of the victims who
contacted the FTC personally knew the person who had stolen and misused
their identity. These relationships include family members, friends,
neighbors, roommates, and associates from the victim’s workplace.
Other victims, while they did not know the suspect personally, recalled
an event or incident that they believe led to the identity theft.
Most typical was theft of a wallet or purse, but others reported theft
of information from financial records and obtaining information from
financial institutions. Not surprisingly, most victims do not know
how the identity thief obtained their information. That being the
case, what can financial institutions do to protect themselves and
their customers? The best defense is to know how the schemes work
and train staff to exercise caution.
Identity Assumption
Identity assumption in check fraud occurs when criminals
learn information about a financial institution customer, such as
name, address, financial institution account number, social security
number, home and work telephone numbers, or employer, and use the
information to misrepresent themselves as the real customer. These
schemes may involve changing account information, creating fictitious
transactions between unsuspecting parties, or preparing checks drawn
on the valid account that are presented using false identification.
This fraud is made easier when organizations, such as the departments
of motor vehicles, use social security numbers on drivers’ licenses
as identification. In North Dakota, because those numbers are more
available, financial institutions (and customers) must be especially
careful. (Effective January 1, 2002, N.D.C.C. § 39-06-14 requires
the removal of the social security number from the actual driver license,
unless the driver requests the use of their social security number.)
Example: A financial institution customer pays a bill in the normal
course of business. An employee of the payee copies the check and
provides it to a partner in crime who contacts the financial institution
and, using information from the check, pretends to be the account
holder. The criminal tells the financial institution that he or she
has moved and needs new checks sent to the new address quickly. When
the financial institution complies, the forged checks are written
against the customer’s account. |
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Example: A
burglar steals a statement for an account at financial institution
A, and a co-conspirator steals a box of new checks for a different
person’s account at financial institution B. They prepare the
stolen checks to be payable to the valid account at financial institution
A. Using fraudulent identification, one of the criminals poses as
the payee to cash the checks at drive-through windows at financial
institution A. Because the criminals know that sufficient cash exists
in the account to cover the check, they can ask safely for immediate
cash.
Example: A criminal uses customer information, sometimes from a financial
institution insider, to order checks from a check printer or to create
counterfeit checks and false identification. The criminal then writes
fraudulent checks and presents them for deposit into the customer’s
account, requesting part of the deposit back in cash. The cash-out
from the transaction represents the proceeds of the crime. This is
also known as a split-deposit scheme.
Identity assumption schemes can be successful when a financial institution:
• Accepts account changes over the telephone;
• Is careless in requiring and reviewing identification presented
for
• Does not limit the size of cash transactions, especially
at drive-through windows.
To protect against such frauds, financial institutions should ensure
that changes to accounts are secure, by requiring customers to request
changes in writing (or in some other way, such as password identification)
so there is some guarantee of the identity of the customer, and train
personnel, including all tellers, to:
(1) Check identification carefully, particularly
(2) Require two forms of identification;
(3) Record the identification information on the back of the item
presented;
(4) Inspect checks carefully to ensure that they are not counterfeit
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