Watch employees, outsiders for banking fraud

0
3072

While a general manager for an ACE Hardware store, Steve Frederick worked with a receiving manager who took more than $200,000 worth of merchandise while working at the store.

“When we caught him, he had his garage set up like a hardware store,” Frederick said. “He was selling stuff on the weekends out of his own personal hardware store.”

“That’s a great example of asset misappropriation,” said Lynn Becka, financial center manager for UMB Bank at the Citadel Mall.

Frederick made his comments last week at a UMB Bank-and-Breakfast Club, a networking event that features information helpful to small businesses in Colorado Springs. This month’s topic was business fraud and how to minimize or eliminate damages.

There are two types of business fraud: internal and external, Becka said.

Fraud is American Family Insurance’s top business insurance claim for small businesses, said American Family Agent Michael Janzen.

Janzen advised people to watch the employees who have access to making deposits and withdrawals. Over time, “they get too much power,” Janzen said. Used by small businesses, check scanners provide bank routing and account numbers.

“If you’ve got terminals, check scanners, cash, you are vulnerable to internal fraud,” Becka said. She suggested business owners frequently audit their own books.

At UMB, “we don’t just settle for an annual audit. You have to make sure your books are clean every single month.

“It’s great when you get comfortable as a business owner, your company’s growing and you think you’ve hired somebody you can trust,” Becka said. “But the reality is, you really can’t trust anyone. You just never know.”

Wire transfer fraud

It happens “quite a bit,” that thieves use other people’s debit and credit card information and try to set themselves up with electric funds transfer, known as ACH (Automated Clearing House) in the banking business, Becka said.

“I think you’ll see a lot of that decrease because of the chip and PIN technology. If you’ve got the new terminals and you’re in compliance, you should see a reduction in fraud, especially on ACH transfers and credit cards,” Becka said.

Now, many banks require people to appear at the bank before they approve a wire transfer.

Becka told the story of a man who called a bank, asking to transfer $130,000 into his checking account.

“The very bright and alert teller says, ‘OK, let me just ask you a few questions first,’” Becka said. The caller answered all the questions right, the last four of his Social Security number, date of birth and address. The teller even hung up and called the man back at the phone number on file at the bank for owner of the account. He answered.

“The teller still didn’t feel comfortable. He just felt something in his gut that something was wrong,” she said. The caller was “playing it up perfectly, saying, ‘Yeah, you know me, I come in there all the time.’ ”

Finally, the teller had one more question. If the caller was in the bank “all the time,” he should know what the teller looked like, so he asked the caller to describe him.

“Brilliant teller! That’s where it all fell apart,” Becka said. “Kudos for this teller for saving the bank $130,000. We found out later that the bad guys have a way of rerouting your phone number so when [the teller] calls you back, it rings at your phone.”

In another example, a businesswoman in her 80s entered the bank and asked it to transfer $30,000 for a bulldozer. Becka was uncertain, so she persuaded the woman that they should together Google the man’s address.

After finding the results, “I said: Why would a guy be selling you a bulldozer who lives in an apartment in Wyoming?” Becka said. The woman canceled her request.

Check signatures

Tellers at UMB Bank catch people “all the time trying to cash forged checks,” made by people who took them while doing work on the victim’s house, she said.

Recently Becka managed a bank operation near the dog park at Bear Creek Park. There, criminals were able to watch the women leave their cars with their pets.

If the women took no purse with them, then obviously the purse had been left in the car, Becka said.

“Checkbooks were being stolen daily out of that park and forgeries were pretty rampant,” she said.

“They write the check out to themselves and scribble a signature. If the teller’s not checking that signature, the check can get cashed.”

For people who write checks, Becka advised business owners to check all signatures on identification cards.

The most common internal fraud is in the form of payroll fraud, expense reimbursements, adding more work hours, she said.

Most of the time, Becka said, internal fraud is detected and reported by either an anonymous person or a co-worker.

NO COMMENTS