Check-fraud detection program launched

A coalition that includes the state’s banking associations launched an anti-fraud program today in Colorado aimed at protecting consumers and others from check scams.

As part of the campaign, 21 banks and credit unions will distribute brochures about such scams and similar fraud cases to anyone who comes in to deposit checks or money orders of $1,000 or more, or to withdraw $1,000 or more.

“The key is to prevent consumers from being victimized by educating them about these scams at the very point where they may be at risk,” said Susan Grant, director of consumer protection for the Consumer Federation of America, one of the organizations leading the program.

The average loss in a fake-check scam is $3,000 to $4,000. Elderly people are often targeted in such scams.

In check scams, a person receives a genuine-looking check or money order and is asked to wire money to the scammer.

In other scenarios, a person is recruited to work from home to process payments or as a “mystery shopper,” and is instructed to send money somewhere as part of the job. Regardless of the scenario, the checks are fake, and it can take weeks for a financial institution to know whether there is a problem with the check or money order. By then, the victims have been defrauded of the money they sent, while owing bounced-check fees to their bank.

“These crooks take advantage of the trust that the financial system is built on,” said Don Childears,  CEO of the Colorado Bankers Association. “Consumers need to understand that they are responsible for the checks and money orders that they deposit or cash because they are in the best position to know if the people who gave them to them are trustworthy.”

The CFA will distribute the brochure, “Don’t Become a Target,” to participating banks and credit unions. English and Spanish versions of the brochure are available on the CFA website.

Along with the CFA and the state bankers association, the consumer-education program is a collaboration between the the Attorney General’s Office,  Independent Bankers of Colorado, the Credit Union Association of Colorado, Colorado AARP Elder Watch program, and the Colorado office of the U.S. Postal Inspection Service.