Posts Tagged ‘check fraud’

11
Jul/1152

New Wireless App – Depositing Checks Using Your Cell Phone?

A recent commercial on tv highlighted a new app to be launched in the near future, perhaps as early as this summer.  The app will allow a smart phone user to take a picture of a check to be deposited, and transmit the picture to their bank.  The user will not have to physically go to the bank, nor present the actual check for deposit with the bank.

I see the convenience of this app, being able to open your mail and make your deposits without ever leaving your house.  This could be especially handy during inclement weather, or if you have family members under your care who can’t be left alone (young children, older adults).

However, I would be remiss as a fraud examiner if I didn’t ponder how this new app could effect the incidents of fraud.  A real problem already exists with counterfeit, altered and stolen checks being cashed and/or deposited, along with multiple types of scams, including one whereby unsuspecting individuals are solicited to deposit checks, only to retain a portion and transmit the residual funds.  Often to perpetrate schemes involving counterfeit, altered or stolen checks, individuals (“mules”) are drafted to receive, cash or deposit the checks.  Once completed, the individuals forward the funds received to their “employer.”

The present schemes rely on tellers, clerks and other “live” individuals who handle cashing or depositing checks to look for signs indicating the checks may be counterfeit, altered or stolen.  With the release of the new app, there will be no teller interactions.

It will be interesting to see what safeguards are put into place with this new app, and also how long before this scheme is exploited once the app is released.

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15
Apr/101

Keeping Up With Embezzling? Shop at Staples!

In the movie “Men In Black” (MIB) staring Tommy Lee Jones, Will Smith and Vincent D’Onofrio, there is a scene where they visit a newsstand to collect the recent tabloids.  Kay (Jones) tells Smith that the tabloids are what they use to keep track of the aliens living on the planet. He makes a reference to Elvis, and tells him he isn’t dead, he simply returned to his home planet.

If you want to remain current in the world of employee embezzlement, I suggest you develop a similar routine to keep up with the latest developments.

I am amazed that some types of employee thefts, tried and true for years on end, continues to plague employers in this day, especially when they are very well known and very basic schemes.

My routine involves shopping at Staples, although any office supply store would suffice.  It is there that you will learn the latest types of pens, inks and other office supplies that can be used by an ill-willed employee to steal from the company.

The latest is the revival of the erasable ink pens.  There simply is no place for erasable ink pens (or pencils) in the accounting department of any employer.  For example, checks manually prepared using erasable ink pens can be altered after they are signed – the thefts are just that easy.  This is why you need to know what these pens look like, and scream if you see your staff using them.

Pilot’s “Frixion” are the latest rage.  The ink can be removed by friction.  Simply use the rubber end of the pen and erase off the writings.  There is no place for these in the finance and bookkeeping offices.  You need to know what they look like, and ensure they are not being used.  Better still, never have manual checks altogether – insist all checks are computer generated from your accounting system.

What the Frixion package does not tell you is that the ink is also thermostatic ink (reacts to temperature).  If you write with the pen and heat up the area where you wrote, the ink will go transparent.  Once cooled, the ink will re-appear.  Fun for a science project, and for ensuring a document is the original, but no place for this in accounting.

I encourage you in your battle against employee fraud to visit your local office supplier on a regular basis, to watch for the latest items.

Watch for my next post – USB Jump drives.

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4
Feb/101

Still Writing Manual Checks? What pens do you use?

New schemes never cease to amaze me.  The resurgence of old schemes is even more interesting.

The Pilot Frixion pen series are marketed as erasable gel pens. Other pen makers may offer similar pens. For certain applications, these pens are great.  Make a mistake while writing, simply rub away the error, and re-write it correctly.

Accounting, finance and bookkeeping departments are not appropriate locations to be finding individuals using these pens. The reason is obvious – once a check or other important document is written, it can be easily changed subsequently, as the ink is erasable.  Hopefully I am writing the obvious.

However, even though I brought and tested these and similar pens, I failed to read the fine print, and also failed to identify that the same ink can be hidden (disappears) with temperature. The ink in these pens are heat sensitive.  As little as body heat can cause the ink to go transparent, removing all visible traces of the original writing.

How does this relate back to a significant risk within accounting?  An individual writes out a manual check using these pens. The check is presented to the authorized signer for signing.  Once signed, the check is warmed up (put into one’s pocket), leaving only the signature.  Then the check can be re-written or even typed out, replacing what was originally written manually. The signature is still valid, but the payee and amounts have been fraudulently changed.  What was a check to petty cash for $200 now reads payable to the individual for $5,200.

I also learned cold temperature brings the original ink back to visible status. Take the same check that was warmed up, and put it into the refrigerator.  The original ink comes right back.

To best protect yourself from becoming a victim of fraud or embezzlement, you should be aware of these types of products and risks, and watch for things like these pens, to ensure they never show up on your employee’s desks.

The best way to detect if such a scheme was being perpetrated would be to have the authorized signer review the bank statements and canceled check images each and every month, looking for any checks not familiar to the signer.  If your bank doesn’t return printed images of your canceled checks, request they do so.

Complacency will cost you in the end.

http://www.pilotpen-store.com/product_list.asp?SKW=PILFRIGEL&HDR=FriXion

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