Combat Fraud and Identity Theft by Reviewing Your Statements Each Month

CPAs & Advisors

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With the prevalence of automated bill payment, many busy consumers don’t bother to review their monthly bank or credit card statements anymore. Or they may review only those charges above a certain dollar threshold. But a recent indictment by the Federal Trade Commission highlights how important it is to review every line item on your statements, even the small ones.

In March, a Nevada grand jury indicted a British man living in Las Vegas, Nevada, on 39 counts of wire fraud, aggravated identity theft and money laundering for withdrawing money from victims’ bank accounts without authorization. He used the ill-gotten gains to purchase five airplanes, a Land Rover, a Dodge Charger, multiple tractors, five all-terrain vehicles and even a fire truck.

Here’s how this scam allegedly worked. According to the indictment, from 2008 through 2013, the fraudster operated a third-party payment processing company that specialized in creating remotely created checks (RCCs). Also known as demand drafts, RCCs are checks created by third-party payees, rather than the account holders. In place of a signature, an RCC contains a typed statement claiming that the check was authorized by the account holder. On behalf of its merchant clients, the company created and deposited RCCs drawn on the consumers’ bank accounts.

These legitimate transactions provided access to thousands of accounts. To gain access to additional accounts, the perpetrator purchased “lead lists” that contained detailed personal and financial data of thousands more consumers.

In 2013, he established a phony online business that purported to help consumers find online payday loans. Then he allegedly used the payday loan company to create and deposit more than 750,000 RCCs totaling more than $22 million. Most of the victims never visited the phony payday loan company’s website. Instead, the fraudster made unauthorized charges using the personal data obtained from the payment processing company and lead lists.

About half of the fraudulent RCCs were returned by the account holders’ banks — often because the consumer noticed an unauthorized charge for $30 on his or her bank statement and disputed it. But the victims never noticed the charges and, therefore, didn’t dispute them. When the perpetrator ran out of new accounts to charge, he repeated the scam against accounts he had already charged.

The bottom line? Take a couple of minutes to review your bank and credit card statements every month. If you’ve gone “paperless” but you’re not the type of person who will remember to log in to check your account online, contact your bank or credit card company and request to receive old-fashioned paper copies again.

© 2016

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