What Is a Bank Cheque Fraud

14 December, 2023

Cheques are still used for various purposes by numerous entities and individuals. Unfortunately, scammers also target cheques to conduct their fraudulent activities.Any fraudulent activity conducted through a cheque qualifies as cheque fraud. Scammers use multiple ways of executing such scams. You need to know some easy-to-follow tips to save yourself.

Types of cheque fraud

Cheques typically work on trust and confidence between the two parties involved. The receiver trusts the issuer for the cheque to be honoured by the issuer’s bank and ultimately receive the payment. If the issuer lacks sufficient funds in the account, it will result in a cheque bounce, breaching that trust.

Scammers have found unique ways to misuse this trust between the transacting parties. The following are some of the common ways in which fraudsters exploit the cheque instrument - 

1. Fake cheques - With the current technological advancement, scammers are also becoming technologically advanced. By using the latest printing technology, scammers can now print counterfeit cheques. These cheques resemble the look and feel of the original cheque in terms of bank logo, colour scheme, etc.
   
   Trusting a future receipt of payment basis a fake cheque can constitute a monetary and trust loss. Banks and regulators constantly try to add more security features that scammers cannot replicate to curb such incidents.
   
   

2. Forgery - A criminal offence that involves creating a false copy, typically signatures, constitutes forgery. Scammers make fake signatures on genuine cheques to make them usable and withdraw funds.
   
   Some scammers hire professionals who replicate someone’s signature with a striking resemblance. For forgery, scammers need to forge your signature and get hold of your original cheques.
   
   

3. Refund scam - This involves issuing a false cheque to the victim for an extra amount than what was agreed on. Once the victim receives such a cheque, the fraudster asks the victim to send back the extra amount via a digital transfer.
   
   The scammers request a refund of the excess amount before the victim presents the cheque for clearance. When the victim finally attempts to encash the cheque, it is only then they learn that the cheque given to them was either fake or the issuer never had funds in the account to honour the payment.
   
   

4. Altering - Cheques filled in by you might get fraudulently changed. Fraudsters can now erase the originally filled-in details using specific chemicals. Once the scammers have erased the particulars, they can enter their name as the beneficiary or change the originally entered amount.
   
   

5. Impersonation - If you need to write a cheque in someone’s favour, please attempt to verify their account details. Scammers might call you impersonating the beneficiary and ask you to change the account where the amount has to be received. If you ever receive such a communication, then it is always best to cross-check it.
   
   

How can you save yourself from cheque scams? 

Irrespective of which side you are on, the receiver or the issuer of a cheque, you must know what you can do to save yourself from becoming a victim of cheque-related fraud. Below are some easy-to-follow tips which you can incorporate to prevent such incidents - 

1. Note security features - While dealing with cheques, looking for some standard security features is essential. Banks add various features like holograms, microprinting, watermarks, etc. If you make it a practice to note such features, it can potentially prevent you from receiving and trusting a fake cheque.
   
   
2. Keep your chequebook safe - As you might have understood by now, if scammers get hold of your original cheques, it can potentially expose you to fraud. It is relatively simpler to scam using an original cheque than creating a fake one.
   
   You must keep your chequebook in a secure place, even if you aren’t using it regularly. If your chequebook gets stolen, please report it to the relevant authorities immediately to prevent any type of misuse.
   
   
3. Keep a record - Almost all chequebooks have pages dedicated to keeping a record of all the cheques. Inculcate the habit of entering details of all the cheques issued in that record. This will help you avoid getting cheques stolen from the book, as cheques have a unique serial number and are placed in a specific order.
   
   
4. Exercise caution - If you ever receive a cheque for an excess amount, always deal with it cautiously. You might get a communication asking for the refund before you encash the cheque. Do not transfer any amount; instead, ask for another cheque for the original amount or wait for the bank to clear the cheque before making any such refund payment.
   
   
5. Shred - If you have unused cheques or cheques that you have cancelled, then make it a habit to shred them properly. If scammers get access to such cheques, they can use it to create a duplicate copy of your cheque.
   
   
6. Secure mailboxes - It is essential to safely secure your mailboxes to prevent your delivered documents from getting stolen. If your chequebook is delivered to an unsecured mailbox, a scammer can steal it to use it in their favour.
   
   

To issue cheques safely, you need a trusted bank that keeps itself updated with recent technological advancements.

Conclusion

Now that you know how scammers operate using cheques, you must stay vigilant to prevent such fraud. You can use HDFC Bank Vigil Aunty to keep yourself updated on new modes of fraud, their prevention methods and what to do if you ever become a victim of any fraud.


*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.