As they get ready to deal with the challenges of the New Year credit counselors, lenders and servicers are reshuffling their fraud prevention efforts and joining resources.
The Consumer Federation of America is combating fraud one scam at a time by bringing together communities at the state and local level.
CFA introduced its “Don’t become a target” program in September. Since it has actively partnered with banks and banking organizations, credit unions and their state level affiliates, nonprofits and state organizations initially in Georgia, then Colorado, Tennessee, Florida, Virginia and South Carolina, and by yearend in New York.
The goal is to provide an innovative consumer education program that aims to protect both borrowers and their financial institutions from fake check scams.
Various industry reports including findings from CoreLogic have shown an increase in fraudulent activity, which is why many insiders that while prevention is never 100% successful it is the best way minimize fraud. Delinquencies and foreclosures have worsened customer vulnerabilities opening up new opportunity for fraudsters whom appear to have escalated especially fraud in short sales, modifications and other foreclosure prevention efforts.
For the banks it is a matter of implementing the right technology, data analytics and fraud response policies that help minimize fraud losses through inclusive, networking-based financial education efforts.
Banks and credit unions participating in the “Don’t become a target” program agree to provide the CFA brochure to every customer who comes into the bank to deposit checks or money orders of at least $1,000 to a savings or checking account or withdraw a minimum of $1,000 to pay their mortgage or other any other payment.
In New York up to 22 banks and credit unions signed up with CFA as a way to prevent customers “from being victimized” by providing an easy to understand brochure about check scams to ensure they are educated “at the very point where they may be at risk.”
Chairperson and executive director of the New York State Consumer Protection Board, Mindy A.
Bockstein, described the goal of the effort—which also included the city’s Credit Union Association, New York Bankers Association and Independent Bankers Association of New York State—it is impossible “to detect these counterfeit checks just by looking at them.” The CPB and its state and national partners are urging customers to exercise extreme caution.
According to project leader of the AARP Foundation of Colorado, Amy Nofziger, older people are frequently targeted especially in the sweepstakes and lottery variations of these scams.
Fake check scams described as advances on a sweepstakes lottery may request certain tax payments from the recipient. Also “popular” scam scenarios are recruitments of “mystery shoppers” that have money transfers in their job description. Regardless of how they end up there, these check fraud victims may owe thousands of dollars to the financial institutions where they presented such checks usually at an average loss of $3,000 to $4,000.
CFA’s “Don’t become a target” brochures are bilingual, half in English and half in Spanish, and are distributed to government agencies, nonprofits, banks and credit unions free of charge. These scams may take anywhere from several days to several weeks to discover.
To prevent fraud both “customers and banking personnel need to learn how to recognize the warning signs,” said Barbara Walker, executive director of the Independent Bankers of Colorado.
Executives find the best fraud prevention way is to prepare personnel and educate customers to recognize “the warning signs” of fraud. “The most glaring sign” of such fraud is a person or organization that sends a check and asks the beneficiary to wire back part of the money.
So far the program received its best response in Georgia where nearly 60 banks and credit unions signed up to participate.
