Worrying rise in cheque fraud emergesHow to protect yourself against cheque fraud scams

03 December 2012

Cheques and pen

Despite the number of cheques written each year falling, cheque fraud increased by 9% between January and June 2012. Total cheque fraud hit £17.9m, compared with £16.4m during the same period last year.

The new figures from the Cheque and Credit Clearing Company (C&CCC) show that one of the most common cheque fraud scams involves criminals intercepting cheques and altering them before paying them into an account specifically opened for the fraud.

How to avoid cheque fraud

The C&CCC has issues tips to avoid falling victim to cheque fraud:

  • Draw a line through all unused space, including after the payee name, the amount in words, and the amount in figures.
  • Whether you are writing a cheque to an individual, a business or an organisation, make sure that you write their name in full - do not just write their initials.
  • If you send someone a cheque that they don’t receive, speak to your bank to get the payment stopped.
  • Only accept a cheque from someone you absolutely know and trust.

If you fall victim to cheque fraud

If you think you’ve fallen victim to cheque fraud, contact your bank immediately. If you’re not happy with the way your bank deals with your case, complain to the bank in the first instance and then, if necessary, to the Financial Ombudsman Service (FOS).

Fraud action taken by the banking industry

If you unwittingly receive a fraudulent cheque, you may be covered under the so-called 2-4-6 rules. Under this system, at the end of the sixth working day after paying a cheque into your bank account, the money is yours and you are protected from any loss, even if the cheque turns out to be fraudulent. The cheque funds cannot be reclaimed without your consent, of course, you are a knowing party to fraud.

The banking industry sponsors its own specialist police fraud squad – the Dedicated Cheque and Plastic Crime Unit. Last month the Unit dismantled what is believed to be one of the UK’s biggest ever counterfeit cheque crime groups following a major operation in Yorkshire and Scotland.

Banks also identify potentially fraudulent cheques as they pass through the clearing system. £241m of attempted cheque fraud was spotted and stopped during the clearing process in the first half of this year.

More on this…

  • How to complain about financial services – How to complain if you’re bank won’t help
  • Understanding card fraud – Tips to protect yourself against card fraud
  • Online banking security – We rate the banking security of leading banks’ websites