I'm bored too...ask ScottieK about the banking industry

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ScottieK, I haven't read Gold Sheets in a while. Where are new BBB credits coming to market?

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I'm not an investment banker. Quick google search says Australia and Russia, specifically, bonds on the Russian government itself.

Daily Reckoning BBB credits

ScottieK

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Sorry, I was asking about spreads to LIBOR.

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nerd.

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Pot. Kettle. Black.

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no [censored].

good song though

[ScottieK]

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My business just got defrauded. Someone produced fraudulent checks, got a scanned copy of an authorized signature, and cashed about 10 checks each for $5000 at a variety of branches (all the same bank) over a three day period. Each check was made out to a different name.

Here's the question: Is there any possibility that this wasn't an inside job on the bank side? It seems that they got too many details right to be on the outside, and it also seems that they had set up multiple fraudulent accounts in order to cash the checks.

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Yikes. Well, I'm guessing your checks are printed out at the bank. All the accounts are at the same bank, which is also the same bank that prints your checks. They got an authorized signature scan. Setting up the accounts and getting the signature would require system access. Getting access to the check stock may be easy, but printing them would probably also require system access. Who else would be able to do all this except a bank employee?

Seems like an inside job to me. Bank employees are tempted all the time...just takes one moment of weakness. What does the bank say?

ScottieK

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I'm not the one dealing with the bank directly. We closed our account, reopened it, and they are obviously replacing the missing/stolen funds. They are not involving us in the investigation (if there is one).

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Well that's good, I guess. Bank employees rarely get away with this stuff. I am surprised that the line tellers didn't catch on to the account activity...ours are trained to pull up account activity for any check above a certain dollar limit. And above a higher limit, the branch manager must approve the transaction. This is how they catch check kiters and stolen checks.

The only other thing I could think of is if one of your employees got hold of the checks and set up accounts at the bank (maybe they're authorized to do so on behalf of your company?) If this was the case, they would have to know how to print out the checks and get that signature on them.

ScottieK

[ScottieK]

Lunchtime...BBL.

Credit scores are all about the predictability of consumer behavior....namely, propensity to repay debt. Paying bills on time, length of residence at one address (preferably a home), no derogatory comments on your account, and demonstrating an ability to manage debt are all good for your credit score. I have a scorecard on how various credit factors are scored, but it's at home.

ScottieK

[posnera]

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Well that's good, I guess. Bank employees rarely get away with this stuff. I am surprised that the line tellers didn't catch on to the account activity...ours are trained to pull up account activity for any check above a certain dollar limit. And above a higher limit, the branch manager must approve the transaction. This is how they catch check kiters and stolen checks.

The only other thing I could think of is if one of your employees got hold of the checks and set up accounts at the bank (maybe they're authorized to do so on behalf of your company?) If this was the case, they would have to know how to print out the checks and get that signature on them.

ScottieK

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There is no possibility (and I'm not being naive) that anyone on our side was doing this. It is a small business and our checks are handwritten by our bookkeeper(same person for >15 years). The fraudulent checks were computer generated.

I assume the thief knew exactly how high to make the checks without being stopped by the teller.

Also, don't you need sufficient funds in your account to get cash? Even if the check is from the same bank? For example, I have $500 in my account. Can I walk up with a $2500 check and expect to get cash from the teller for the full amount?

The more I think about this, the more elaborate the scheme must have been. $50,000 isn't nearly enough money to make all of this worthwhile. I'm guessing that there is a much bigger problem. Maybe organized crime with an inside at the bank?

[Riverman]

Why won't a bank ever admit that they made a mistake and/or not charge unwarranteed fees/"service charges?"

[Jakesta]

I have a 3 year old delinquent collections account with Verizon, for $500. They claim that I never returned equipment but I know I did.

Right now my credit rating is 550 with that collections account on there. I have one credit card and have never missed a payment in the 21 months that I've had it.

How much do you think that paying off that collections account will improve my credit rating? Could it vault me into the 720+ good credit range?

And does it make a difference whether or not the agency removes it from my credit report or just writes paid in full? They said that's it's their policy to write paid in full and not remove it, but I'm wondering if it makes a difference?

[ScottieK]

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Well that's good, I guess. Bank employees rarely get away with this stuff. I am surprised that the line tellers didn't catch on to the account activity...ours are trained to pull up account activity for any check above a certain dollar limit. And above a higher limit, the branch manager must approve the transaction. This is how they catch check kiters and stolen checks.

The only other thing I could think of is if one of your employees got hold of the checks and set up accounts at the bank (maybe they're authorized to do so on behalf of your company?) If this was the case, they would have to know how to print out the checks and get that signature on them.

ScottieK

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There is no possibility (and I'm not being naive) that anyone on our side was doing this. It is a small business and our checks are handwritten by our bookkeeper(same person for >15 years). The fraudulent checks were computer generated.

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Okay. Then this also points to a bank employee (unless someone stole your checks from the bank or intercepted them through the mail and forged them....think Frank Abagnale from Catch Me If You Can.)

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I assume the thief knew exactly how high to make the checks without being stopped by the teller.

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That is a possibility. I am wondering if this was a one-man job and the thief carried the checks to all the branches for cashing, or if he had some buddies do it.

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Also, don't you need sufficient funds in your account to get cash? Even if the check is from the same bank? For example, I have $500 in my account. Can I walk up with a $2500 check and expect to get cash from the teller for the full amount?

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As the payee (one who is getting paid,) you don't need sufficient funds in your account because the check isn't being drawn on your account. It's being drawn on the payor's account (in this case, your company's account.) The teller should check the payor's account for sufficient funds, esp. if it's over a certain dollar amount. If the payee does not have an account with that bank, he should be required to submit proof of identification and/or a thumbprint.

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The more I think about this, the more elaborate the scheme must have been. $50,000 isn't nearly enough money to make all of this worthwhile. I'm guessing that there is a much bigger problem. Maybe organized crime with an inside at the bank?

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Easy, easy. This doesn't have to be an elaborate scheme tied to organized crime. As I said, one corrupt bank employee who thinks $50,000 is his price could pull this off.

- He opens ten fictitious accounts. If he didn't do this on the system directly, he submitted ten bogus paper applications.
- He either gets hold of your check stock or your reordered checks....or he prints them out if he has access. If he gets a canceled check, he could try to forge it on a computer.
- He gets hold of your authorized signature if it's on file (which it probably is, either electronically or on the authorized signatures card.) If not on file, then maybe on a canceled check or some other document.
- He scans the signature and superimposes it on the signature line of the check.
- He makes the checks out to the names on his ten accounts.
- He goes branch to branch, cashing the checks. Since he is an "account holder," he just fills out a cash back deposit slip with his bogus account number, and he's got the money (this is also a scam tellers are trained to look for, called majority cash back.)
- Done and done.

He's probably on camera somewhere cashing the checks. The transaction should be timestamped and teller-stamped, so picking up surveillance of the transactions should just be a matter of time. I hope that your bank is keeping your company informed of any developments. Also, I would ask the bank if they have any additional security that would help prevent this sort of thing in the future (besides training their tellers better.) That sucks.

ScottieK

[ScottieK]

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Why won't a bank ever admit that they made a mistake and/or not charge unwarranteed fees/"service charges?"

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I've had my bank (at the time, B of A) admit they made a mistake regarding a deposit I made. I'm not a consumer banker, but I do know that most consumer banking is driven by volume and opening new accounts. The more volume they have, the more likely they will collect fees from account holders.

Overdrafts and Insufficient Funds fees are common for when you overdraft your account. Larger items are cleared before smaller items because larger items tend to be more imporant (e.g., rent vs. Starbucks.) Be sure to keep a good cash cushion in your checking account so this doesn't happen. Also, you can sometimes tie your checking account to your credit card or savings account to avoid insufficient funds fees and dings on your credit for bouncing checks. You can also get overdraft protection.

As for other fees, if you don't like the fee structure of your account, talk to your banker about switching the account type or maybe change banks. Every bank offers something different. One of my biggest peeves is double-usage fees for ATM's (one from the ATM company, one from your bank since it's not a bank ATM.) Since I work at a bank, it's not much of a problem any more. Some banks now offer ATM fee reimbursements. Shop around....but all banks have some type of fees or another. Banks are getting better about this just to remain competitive.

ScottieK

[ScottieK]

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I have a 3 year old delinquent collections account with Verizon, for $500. They claim that I never returned equipment but I know I did.

Right now my credit rating is 550 with that collections account on there. I have one credit card and have never missed a payment in the 21 months that I've had it.

How much do you think that paying off that collections account will improve my credit rating? Could it vault me into the 720+ good credit range?

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Honestly, I don't know. I don't think a derogatory remark of that amount would drag your score down almost 200 points, maybe 40-60 at the most.

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And does it make a difference whether or not the agency removes it from my credit report or just writes paid in full? They said that's it's their policy to write paid in full and not remove it, but I'm wondering if it makes a difference?

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Removing it would be ideal, but I think you would need to convice someone at Verizon to do that (since it was their error.) I don't think a collections agency can remove a remark made by another company. The most the collections agency can do is say that you've paid it. That will help your credit score, but not as much as removing the derogatory. In time, those derogatories won't ding you as much as they do now.

ScottieK

[Wes Mantooth]

Scottie K,

excellent thread, great info. I currently have an account in a Credit Union and another account in a regular old bank. I have been thinking about just closing the the bank one and moving it all into the credit union. I think credit unions offer better interest rates in money markets. Is this a good idea? correct me if I said anything wrong?

-ManTooth