Bank fraud, or defrauding a federally insured bank, is a federal offense that can carry a state prison sentence of up to 20 years and/or fines of up to $250,000. This form of fraud can refer to any beguiling or providing false information to a bank, credit union, or savings and loan association. Common types of bank fraud include, but are not limited to, online bank fraud, forging signatures on checks, ATM fraud, creating counterfeit checks, and deceiving a bank in a real estate or mortgage loan application. The U.S statute that discusses bank fraud explicitly defines it as “whoever knowingly executes, or attempts to execute, a scheme or gimmick– to defraud a financial institution; or to obtain any of the moneys, funds, credits, assets, securities or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises; shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.”
Typically, someone you don’t know approaches you with a request that involves cashing a check or depositing it into your bank account and then asks you to use a portion of that money for what appears to be a legitimate purpose. Scammers are counting on you to believe that once you deposit or cash a check, it has “cleared” and cannot be returned unpaid. When you deposit or cash any check, your bank forwards that check to the bank on which it was written for payment. If the paying bank discovers a check is fraudulent, it will return the check to your bank without paying it. The deposit will be reversed from your account. You are responsible for the full amount of the original check and any associated fees. It may take a period of time for a check to be discovered as fraudulent and returned to your bank.
Scammers want to distract you from taking the time to consider whether or not their check, money order, U.S. postal money order or other item is legitimate. They accomplish this by providing a believable and compelling offer to convince you to immediately give away money from your account before their check can be returned as fraudulent. These scams frequently target individuals who are looking for job or dating opportunities, selling items, or seeking to help someone in need. The best defense against bank account fraud is awareness. Review these tips to know what to look for:
- Use common sense. If it sounds too good to be true, it probably is.
- Be suspicious if you are asked to deposit or cash a check and immediately give or wire a portion of the funds.
- Remember that you are responsible and liable for items you cash or deposit into your account. It may take time for a fraudulent check to be discovered and returned to your bank.
- Be very cautious when depositing or cashing checks from individuals or businesses you do not know well or with whom you have only interacted online.
- Do not accept payments for more than the total amount of a sale with the expectation that you send the buyer the difference.
- Do not accept jobs in which you are paid or receive commission for facilitating money transfers through your account.
- Do not accept work arrangements or sweepstakes proceeds that require you to deposit a check and send back a portion of the funds for training materials, taxes or fees.
- Look for typos, discrepancies, and misspellings on checks and other documentation – they are red flags for potential fraud.
- Never be shy about asking for verification or independently researching an individual, company or check.
- Always ask your banker for assistance if you have any concerns about a check you are depositing or cashing.
- Remember that a wire transfer is an immediate form of payment. Once a scammer has obtained the funds you have wired in exchange for a check, the wire transfer cannot be reversed, even if the check was fraudulent.
- Be wary of strangers who initiate a friendly conversation and eventually move to a discussion regarding a financial opportunity or need that requires you to deposit a check, wire money or share an account or credit card number.
- Never give personal information to a stranger who contacts you by telephone, email, or other means. This includes your Social Security number, bank account information, online banking credentials, and credit or debit card numbers.
- Never try to lead on a scammer with the intention of “catching” them or getting back at them. You may unintentionally provide the scammer with additional information that can be used to further defraud you.
If you have any additional questions, or believe you may have been a victim of bank fraud, you should seek assistance from your bank, notify the Federal Trade Commission about the scam, and contact a savvy, competent attorney to help you handle this potential stressful and frightening situation.
 “Bank Fraud Charges,” https://www.jimdicks.com/Criminal_Defense/Theft_Crimes/Bank_Fraud.aspx, accessed December 11, 2013.
 “FDIC Law, Regulations, Related Acts,” Federal Deposit Insurance Corporation, https://www.fdic.gov/regulations/laws/rules/8000-1250.html, last modified September 16, 2013, accessed December 11, 2013.
 “Bank Account Frauds and Scams,” Wells Fargo, https://www.wellsfargo.com/privacy-security/fraud/bank-scams/, last modified 2013, accessed December 12, 2013.
Please keep in mind the information and advice presented in this blog is not intended to be used as formal legal advice. Contact a tax professional for personalized tax advice pertaining to your specific situation. While we try and answer all parts of the question when we write our blogs, sometimes there may be some left unanswered. If you have any questions about your problems with the IRS, SBOE, FTB, or BOE, or tax law in general, call RJS Law at (619) 595-1655.
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