Office of the Comptroller of the Currency

Check Fraud: A Guide to Avoiding Losses

New Account Fraud

A significant amount of check fraud involves new accounts, both personal and corporate, opened by criminals with the express intent of defrauding the bank.

Example 1: A criminal opens a new account using false employment information and incorrect addresses and telephone numbers. After conducting some small transactions or otherwise gaining information on the bank's procedures for posting checks and ATM transactions and the type of identification required to cash checks, the criminal deposits bogus or stolen checks into the account and makes substantial withdrawals before the bank realizes it has been victimized.

Example 2: A criminal opens a corporate account using a fictitious company name and soon deposits a large amount in counterfeit checks into the account. After inflating the account with the counterfeit checks over a short period, the criminal then asks the bank to prepare cashier's checks for a large proportion of the account balance. Because the cashier's checks are reliable, they are easily converted to cash.

New account frauds can be successful when banks do not check carefully the identification presented by people opening new accounts.

To protect against such frauds , banks should thoroughly investigate information presented by a prospective customer to ensure that it is accurate and valid. Banks may do this by:

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