BUSINESS CRIME NOTES



BUSINESS CRIME NOTES

How to Stop!!!

Be able to define “Shrinkage”

Anything that leads to an unexplained loss of money to the business

Be able to identify the different types of business crime:

Shoplifting

Internal Theft

Insurance Fraud

Counterfeit Money

Bad Checks

Credit Card Theft

Armed Robbery

Vendor Fraud

Be able to describe the “cost” of shrinkage to you:

Raises

Trust

Discounts

Promotions

Benefits

YOUR JOB

EXAMPLE

Supermarket w/ $2,000,000 in sales & a profit margin of 1.8%

Suffers a $16,000 loss due to shrinkage

How much must they sell to break even?

Divide $16,000 by 1.8% to get $888,888.89

To confirm, multiply $888,888.89 by 1.8% to get $16,000

Meaning the store must sell for 5 months & make ZERO profit

Be able to describe your role in stopping business crime as:

a citizen a customer service rep.

an employee an individual

Be able to identify at least five signs that someone might be a shoplifter

Nervous Habits? Poor eye contact

Quick movements Eyes darting

Handling merchandise w/out looking

Be able to identify the most common methods used to shoplift:

________________________

____________________

____________________

____________________

Be able to identify the methods used in business to prevent shoplifting:

____________________ ____________________

____________________ ____________________

Be able to identify strategies used by people like you to prevent shoplifting:

Meet & greet every customer!!!

Check back w/ customers often

Know your merchandise:

Prices Location Items Stolen Often

Never leave your dept. unattended

Be able to describe the steps to follow when you suspect someone has shoplifted from your store:

Do not lose sight of suspect

Call for security/mgt. personnel

Wait until the suspect leaves store?

DO NOT physically try to stop

Be able to explain why “honest” employees steal from their employers:

Low expectation of being caught

High levels of frustration:

Low pay

Difficult Customers

Long Hours

The Alibis:

“Company Owes Me”

“Everyone Else is doing it”

“Boss doesn’t appreciate me”

Be able to identify high-risk employees for employee theft:

Those living beyond their means

Employees who regularly violate company rules & regulations

Employees w/ serious debt problems

Be able to describe the methods used to prevent employee theft:

Silent Witness Program

Be able to identify in a short essay what your options are for dealing with an employee you know to be a thief and the pros & cons of each option:

Doing Nothing

Talking w/ the thief personally/privately

Talking w/ the thief w/ partner

Reporting the thief to management

Be able to describe the various types of checks:

One Party Checks Two Party Checks

Business Checks Payroll Checks

Traveler’s Checks Money Order

Treasury Checks

Be able to describe the rules for identifying “Bad” Checks:

Look at the check’s paper & printing

Look at the date & for any alterations

Compare the amt. written w/ #ed amt.

Compare the signature on the check w/ the signature on a picture ID

Do not accept two-party, treasury, or payroll checks w/out an OK from Mgt.

Check the # of the check (age of account).

Look for relevant information - address, phone, SS #, etc. & compare w/ ID

Not in pencil please!!!

Use tele-check or other electronic verification system available

Don’t accept starter checks

Be able to identify suspicious behaviors associated w/ “Hot Cards”:

Customer knows their # but forgot their card!?

Customers who try to hurry or distract you

Producing a card from their pocket vs. a wallet or purse

Customer knows their # but forgot their card!?

Customers who try to hurry or distract you

Producing a card from their pocket vs. a wallet or purse

Unsigned cards

Poor quality cards (embossing, black strip, hologram, etc.)

Cards that won’t scan

Be able to follow the proper procedure for accepting a credit card

Use the electronic verification system

Maintain control of the card

If your are concerned about the card, ask for an ID

Compare the signature on the receipt w/ the signature on the back of the card

Check the quality of the card’s hologram, embossing, & strip

Check the expiration date

Be able to stop the “Fast Change Artist by knowing the one rule to follow:

Always Get Their Money First!!!

Be able to take actions that will reduce the chances of being robbed and increase the chance of catching the thief if a robbery occurs

Common shoplifting techniques

| |A More Brazen Approach |

|Hiding the Merchandise | |

|A large open bag is a common shoplifter tool. It is placed at the thief's |Some shoplifters grab garments from racks close to the door and run off. |

|feet, and objects are casually dropped into it. Be on the lookout for the |This can be prevented very easily by alternating the directions of |

|"bad bag" -- a paper bag that is dirty and wrinkled. Also keep an eye out |hangers. This makes the hangers "lock up" when someone tries to remove |

|for shopping bags that are not from local stores. Preventing this is why |many at once. |

|many stores staple bags shut. Other stores require customers to leave |The really brazen thieves simply walk out with large items that are not |

|their bags by the front door when they come in. |ordinarily put in bags. Prevent this by making it unusual for legitimate |

|Women sometimes use purses to hide stolen items. There is little you can |customers to carry out their large purchases, with a policy that all large|

|do to stop women from carrying purses and handbags. The best prevention in|items must be picked up at a location physically separate from the sales |

|these cases is to watch the customers very carefully. |floor, or that employees take all large items out to customer's cars. Or |

|The baby carriage or stroller is a great tool for shoplifters. There are |you could put big bright stickers on purchased large items. This at least |

|always blankets, toys, and other things in strollers (including the baby) |makes it easily for employees to tell if the merchandise is being stolen. |

|that merchandise can be hidden under. Some thieves have even built false |A common technique, especially if your fitting rooms aren't well |

|bottoms in baby carriages. A newspaper can be used to hide small objects.|monitored, is for the thief to steal garments by putting them on under her|

|Umbrellas with handles are handy for shoplifters trying to steal small |own clothes and wearing them out of the store. Others will just put the |

|items. A common tactic is to keep a closed (but not snapped) umbrella |clothing on and walk out. It's tricky to catch one of these people, |

|hanging on one's elbow or leaning against a counter, and then to drop |because if they haven't concealed the item, they technically haven't |

|items into it. |stolen it until they exit the store without paying. |

|Favorite Shoplifter Clothing |Tricks to Distract You |

|"Crotch-walking" is a technique used by women wearing full skirts and |Most shoplifters cannot succeed unless they get some privacy. This is why |

|dresses. They simply place the merchandise between their thighs and walk |one of the best ways to stop shoplifting is to greet customers as soon as |

|away. Thieves who are good at this have been known to steal hams, |they walk in, then be attentive to them the rest of the time. But skilled |

|typewriters, and other large objects. |shoplifters can distract sales associates using the following tricks: |

|Baggy clothes in general are good places to hide stolen items. Some people|They enter the store in groups, then separate, so there is no way the |

|have extra pockets or hooks sewn into coats and jackets. Beware of the |employees can watch all of them. A pair of shoppers comes in, and while |

|customer with a large coat who keeps his hand in a coat pocket. Some |one distracts you with questions, the other steals. |

|shoplifters have cut slits in the pocket lining, so they can reach for |A single shopper sends the only employee in the store into the back room |

|items without being seen. They may make a big deal out of inspecting an |to find something, and then steals stuff and leaves before the employee |

|item while the other hand slips out and grabs something. |comes back. |

Shoplifter Methods

Many of these thieves work in groups of two or more to distract the sales staff while they pilfer. Shoplifters learn to take advantage of busy stores during peak hours or they may hit at times when employees are less alert, such as opening, closing and shift changes.

Hiding merchandise is the most common method of shoplifting. Items are concealed in the clothing of the shoplifter, in handbags, strollers, umbrellas or inside purchased merchandise. Bold shoplifters may grab an item and run out of the store. Other methods include price label switching, short changing the cashier, phony returns, and so on.

Spot the Shoplifter

Unfortunately, there is no typical profile of a shoplifter. Thieves come in all ages, races and from various backgrounds. However, there are some signs that should signal a red flag for retailers. While the following characteristics don't necessarily mean guilt, retailers should keep a close eye on shoppers who exhibit the following:

• Spends more time watching the cashier or sales clerk than actually shopping.

• Wears bulky, heavy clothing during warm weather or coats when unnecessary.

• Walks with short or unnatural steps, which may indicate that they are concealing lifted items.

• Takes several items into dressing room and only leaves with one item.

• Seems nervous and possibly picks up random items with no interest.

• Frequently enters store and never makes a purchase.

• Enters dressing room or rest rooms with merchandise and exits with none.

• Large group entering the store at one time, especially juveniles. A member of the group causes a disturbance to distract sales staff.

Shoplifting Statistics

Facts:

• More than $13 billion worth of goods are stolen from retailers each year. That's more than $35 million per day.

• There are approximately 27 million shoplifters (or 1 in 11 people) in our nation today. More than 10 million people have been caught shoplifting in the last five years.

• Shoplifting affects more than the offender. It overburdens the police and the courts, adds to a store's security expenses, costs consumers more for goods, costs communities lost dollars in sales taxes and hurts children and families.

• Shoplifters steal from all types of stores including department stores, specialty shops, supermarkets, drug stores, discounters, music stores, convenience stores and thrift shops.

• There is no profile of a typical shoplifter. Men and women shoplift about equally as often.

• Approximately 25 percent of shoplifters are kids, 75 percent are adults. 55 percent of adult shoplifters say they started shoplifting in their teens.

• Many shoplifters buy and steal merchandise in the same visit. Shoplifters commonly steal from $2 to $200 per incident depending upon the type of store and item(s) chosen.

• Shoplifting is often not a premeditated crime. 73 percent of adult and 72 percent of juvenile shoplifters don't plan to steal in advance.

• 89 percent of kids say they know other kids who shoplift. 66 percent say they hang out with those kids.

• Shoplifters say they are caught an average of only once in every 48 times they steal. They are turned over to the police 50 percent of the time.

• Approximately 3 percent of shoplifters are "professionals" who steal solely for resale or profit as a business. These include drug addicts who steal to feed their habit, hardened professionals who steal as a life-style and international shoplifting gangs who steal for profit as a business. "Professional" shoplifters are responsible for 10 percent of the total dollar losses.

• The vast majority of shoplifters are "non-professionals" who steal, not out of criminal intent, financial need or greed but as a response to social and personal pressures in their life.

• The excitement generated from "getting away with it" produces a chemical reaction resulting in what shoplifters describe as an incredible "rush" or "high" feeling. Many shoplifters will tell you that this high is their "true reward," rather than the merchandise itself.

• Drug addicts, who have become addicted to shoplifting, describe shoplifting as equally addicting as drugs.

• 57 percent of adults and 33 percent of juveniles say it is hard for them to stop shoplifting even after getting caught.

• Most non-professional shoplifters don't commit other types of crimes. They'll never steal an ashtray from your house and will return to you a $20 bill you may have dropped. Their criminal activity is restricted to shoplifting and therefore, any rehabilitation program should be "offense-specific" for this crime.

• Habitual shoplifters steal an average of 1.6 times per week.

 

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|Shoplifting |

|Shoplifting can cost your business thousands of dollars each year.  Shoplifters may be any age, gender, or economic|

|or ethnic background.  There is no "typical" shoplifter.  They often work in pairs or groups to divert the clerk's |

|attention while they steal.  They often operate when employees are apt to be less alert, e.g., at store opening and|

|closing times, during the lunch and dinner times, and during shift changes.  Shoplifters also learn to take |

|advantage of crowded stores during peak hours.  Effective prevention begins with an aware and alert staff.  The |

|following tips will help prevent shoplifting. |

|Protective Measures |

|Display Strategies |

|Fitting room security |

|Preventing Ticket Switching |

|Educating Employees |

|Anti-Theft Devices |

|Stopping a Shoplifter |

|Protective Measures |

|Make the shoplifters feel watched.  Elevate the cashier’s platform.  Install mirrors that enable cashiers and sales|

|people to see over and around displays.  Install one-way glass in offices to enable employees to see into the store|

|without being seen from the floor.  |

|Install surveillance cameras to cover cash registers, high-value merchandise displays, entrances, loading docks, |

|etc. Use software that can be programmed to create an alarm when suspicious activity occurs. Mount monitors showing|

|live video at main entrances to let shoppers know that they will be under surveillance in the store. |

|Post signs warning against shoplifting.  Emphasize that you will prosecute.  The best way to discourage shoplifters|

|and keep your business from being tagged as an easy mark is to take a get- tough attitude and prosecute on the |

|first offense. |

|Encourage checking parcels on entry. |

|Require receipts for merchandise returns for cash.  Require a photo ID and signature for returns without a |

|receipt.  And then just give merchandise-only vouchers. |

|Take an inventory of returned merchandise against receipts on a regular basis to catch false returns, i.e., ones |

|without returned merchandise. |

| |

|Display Strategies |

|Minimize the shoplifter's access to merchandise without inconveniencing customers. |

|Keep display and clothing racks away from entrances and exits to discourage "hit-and-run" thieves. |

|Alternate hangers front-to-back to prevent thieves from quickly grabbing bundles of display clothing. |

|Keep small and expensive items out of reach or in locked display cases.  Have sales people show only one item at a |

|time from a case. |

|Use good locks and laminated or “strong” glass in cases that contain expensive items.  This will help prevent |

|smash-and-grab attacks. |

|Arrange merchandise neatly to make it easier to detect missing items. |

|Take daily or weekly inventories of expensive items. |

|Fitting Room Security |

|Keep fitting room doors locked when not in use. |

|Install cafe doors to allow staff members to monitor fitting room use. |

|Limit the number of items allowed to be taken into the dressing room. |

|Post a sign that directs customers to see a sales person before taking items into a fitting room. |

|Issue color-coded tickets and tags to indicate the number of items taken into fitting rooms. |

|Use a return rack for unwanted items. |

|Post signs in fitting rooms warning against shoplifting. |

|Preventing Ticket Switching |

|Use tamper-proof gummed labels. |

|Attach tags with a hard-to-break plastic string. |

|Use preprinted, not hand-written, price tags. |

|Use concealed multiple price tags.  |

|Anti-Theft Devices |

|Install security towers at your exits. They will sound an alarm or otherwise indicate when someone takes a tagged |

|item out of the store without paying for it and having the tag deactivated or removed. |

|Attach anti-theft tags to your merchandise. |

|Provide cashiers with a means of deactivating or removing the tags when items are paid for. |

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|Educating Employees |

| |

|Train your sales people to: |

|Watch for people with loose or baggy clothing inappropriate for weather, and people with large bags or other props,|

|such as newspapers, strollers, briefcases, or umbrellas that can easily conceal merchandise. |

|Pick up stray receipts around the store.  |

|Be aware of shoplifter’s tactics to confuse and distract you.  For example, when working in teams one shoplifter |

|will create a disturbance, e.g., complaining loudly, staging a faint, or knocking over merchandise, to draw |

|attention away from the other who is doing the lifting. |

|Be attentive to people in your area.  This helps legitimate customers and deters shoplifters.  A simple "Can I help|

|you?" or "I'll be with you in a moment" warns shoplifters they are being watched.  Keep a close watch on people who|

|seem nervous or refuse assistance. |

|Cover their entire area of responsibility, even blind spots. |

|Have another sales person cover your area when you leave the floor, e.g., to check for items in the stockroom. |

|Be especially alert at when the store is crowded.  Shoplifters often operate when sales people are busy helping |

|legitimate customers. |

|Watch for shoppers walking with short or unnatural steps, which may indicate that they are concealing lifted items.|

| |

|Watch customer's eyes.  If they are looking at you they may need assistance or are thinking about shoplifting. |

|Train cashiers to: |

|Check the lower racks of shopping carts, watch for switched labels, look inside items that can also be used as |

|containers for lifted items, e.g., tool boxes, jacket sleeves, waste baskets, etc. |

|Check for factory seals on boxed items.  And look inside if the boxes are not sealed. |

|Staple receipts to the outside of packages. |

|Check for and remove or desensitized electronic tags. |

|Be familiar with the store prices.  This can help prevent price switching.  |

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|Have supervisors: |

|Keep employees alert by holding periodic review sessions on store shoplifting policies. |

|Discourage socializing on the sales floor.  A group of employees in one spot usually means inadequate coverage |

|somewhere else. |

|Schedule hours so that an adequate number of sales people are working at all times. |

|Watch for customers lingering in one area, loitering near stock rooms or other restricted areas, or wandering |

|aimlessly through the store. |

|Watch for customers who consistently shop during the hours when few people are working in the store. |

|Watch for customers who visit the store frequently, but make only token purchases. |

|Be alert for disturbances that distract sales people and cashiers. |

| |

|Stopping a Shoplifter |

|If you suspect that someone may be considering lifting something, approach the person and ask "Can I help you?" or |

|"Can I ring that up for you?"  If you suspect someone has lifted and concealed something, keep him or her in sight |

|and notify a manager or security personnel immediately.  If you are working alone, request the assistance of |

|another worker.  Plan a "buddy system" for your own safety and as a witness. |

|If someone leaves your store without paying for an item, have an employee follow the suspect and get a good |

|description of him or her and any vehicle used, and call 911 to report the crime. Do not have your employee attempt|

|to detain the suspect unless he or she has been trained in apprehension and arrest procedures. |

KNOW YOUR MONEY

How To Detect Counterfeit Money

The public has a role in maintaining the integrity of U.S. currency. You can help guard against the threat from counterfeiters by becoming more familiar with United States currency.

Look at the money you receive. Compare a suspect note with a genuine note of the same denomination and series, paying attention to the quality of printing and paper characteristics. Look for differences, not similarities.

Portrait

The genuine portrait appears lifelike and stands out distinctly from the background. The counterfeit portrait is usually lifeless and flat. Details merge into the background which is often too dark or mottled.

Federal Reserve and Treasury Seals

On a genuine bill, the saw-tooth points of the Federal Reserve and Treasury seals are clear, distinct, and sharp. The counterfeit seals may have uneven, blunt, or broken saw-tooth points.

Border

The fine lines in the border of a genuine bill are clear and unbroken. On the counterfeit, the lines in the outer margin and scrollwork may be blurred and indistinct.

Serial Numbers

Genuine serial numbers have a distinctive style and are evenly spaced. The serial numbers are printed in the same ink color as the Treasury Seal. On a counterfeit, the serial numbers may differ in color or shade of ink from the Treasury seal. The numbers may not be uniformly spaced or aligned.

Paper

Genuine currency paper has tiny red and blue fibers embedded throughout. Often counterfeiters try to simulate these fibers by printing tiny red and blue lines on their paper. Close inspection reveals, however, that on the counterfeit note the lines are printed on the surface, not embedded in the paper. It is illegal to reproduce the distinctive paper used in the manufacturing of United States currency.

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Counterfeit Currency

Deceiving people does not gain their confidence, and confidence is a necessary part of running a process efficiently and smoothly.

Confidence is especially important when it comes to money; if people do not have confidence in their money, the process of trading-which is the economy-will not run at all, and we would be forced to revert to barter to obtain the goods and services we need.

ln order to guarantee people's confidence in our money, the United States Constitution empowers only the Federal Government to issue currency (an official and standardized medium of exchange).

Paper money is printed by the Bureau of Engraving and Printing, a section of the Treasury Department, in Washington, D. C. The process involves skilled printers and engravers using specially designed machines to insure the clearest and finest lines which distinguish genuine currency.

Banking officials and Secret Service employees are always on the lookout for counterfeits. All currency received by Federal Reserve Banks is inspected before being returned to circulation. However, detecting counterfeits is not the responsibility of officials alone. It is everyone's business because everyone is affected by the stability of our currency and the economy. Counterfeiters rely on the untrained eye when passing counterfeits. So, one of the best ways of decreasing the production of counterfeits is increasing the probability of fake bills being detected. This can only be done by increasing the public awareness of the characteristics of genuine vs. counterfeit bills.

More On How To Tell If It's Counterfeit…

You count money constantly during the day. How will you pick out the one counterfeit bill from the over 6000 bills you might handle on an average day?

Believe it or not, it is not the portrait, or the mis-alignment of numbers, the run-together pattern, or even the missing red and blue threads that will first tip you off. It is the feel that will instantly alert you to the fact that something is wrong with the bill. Take a real good look at a bill that 'feels different.' There is a good chance that it's counterfeit.

What To Do If You Find One…

1. Do not return it to the passer. Keep it and write your name and the date on it so you can identify it later.

2. Notify the nearest Secret Service office or police.

3. Record who gave it to you along with where and when you got it. If you can, write down a description of the person who passed it, as well as information such as the license number of any vehicle used.

What Happens Next?

The counterfeit will be confiscated by the Treasury Department to remove it from circulation, and as evidence in the event of prosecution of both the counterfeiters and the counterfeit passers. This means that the discoverer loses the face value of the counterfeit turned in. Anyone who is convicted of passing counterfeit currency can receive up to 5 years imprisonment and/or a fine up to $10,000. Thus it is wiser to turn in a counterfeit bill, rather than try to pass it on to someone else. Only when everyone in the economy is concerned and willing to do their part in maintaining the currency's integrity will the circulation of counterfeits be stopped…and our currency's value insured.

Counterfeit Currency, Technology and the Manufacture

In the past, counterfeiters produced false banknotes with printing presses, and some of the more skillful counterfeiters went to great lengths to imitate the original. Today, sophisticated computer printers and copiers enable even unskilled would-be counterfeiters to produce notes that bear at least a superficial resemblance to real ones. However, the federal government continually works to stay a step or more ahead of counterfeiters, updating currency and making it ever more difficult to duplicate.

Two Waves of Counterfeiting

For virtually as long as there has been regular currency, there has also been false currency, which has provided a highly lucrative illegal trade to those who can successfully pass off false banknotes as the genuine article. The period since the middle of the twentieth century has seen two significant waves of counterfeiting. First, there was a surge in the illegal production of banknotes during the 1960s, when advances in printing and graphic arts technology enabled counterfeiters with the right equipment and skills to produce highly accurate copies of federal currency. By the 1990s, however, counterfeiting by means of the printing press had diminished in significance compared to a new variety of counterfeit currency manufacture, this one using computer printers.

The phenomenon of "P-notes," or "printer notes," first came to the attention of law enforcement in the early 1990s. In 1995, authorities made a total of 37 arrests nationwide in connection with the production and distribution of currency produced on ink-jet or laser-jet printers. By 2000, this number had skyrocketed to 4,500 arrests, and officials estimated that P-notes accounted for as much as forty percent of the currency seized by the United States Secret Service (USSS) and other agencies annually.

Contrast of practitioners and techniques. The change in choice of technology also signaled a change in the profile of the average counterfeiter. The old variety of criminal operating in this field tended to be mature and skilled—a professional, highly trained practitioner who usually possessed, or at least had access to, printing equipment whose operation would require knowledge far beyond that of a novice.

The 1990s variety of counterfeiter, by contrast, fit a quite different profile. Rather than being "professional counterfeiters," they were more likely to be drug dealers who used their P-notes in connection with other crimes, most notably the purchase of drugs. Typically youthful (many were juveniles), these new counterfeiters lacked skills for counterfeiting. Whereas the old model at least required some degree of human ingenuity, the new type of counterfeiting was primarily a matter of possessing the right equipment.

Equipment loomed large in the old counterfeiting technology as well, but practitioners had to know how to use it. Counterfeiters of that era carefully studied currency, and made numerous photographs of it with graphic-arts cameras using different filters so as to break down the various stages of the printing process. Only after considerable trial and error could a workable set of printing plates be produced.

In contrast to this painstaking process, the new counterfeiting process required only that one use a high-quality scanner to obtain an image of a bill, then print that bill on a printer with high resolution. Given the ease of production, counterfeiting again became a growth industry during the 1990s, and in 2001, the federal government seized a record $47 million in counterfeit currency. By the following year, the figure had dropped to $43 million.

Anti-counterfeiting Technology

The fact that the value of counterfeit currency seized in 2002 had dropped by almost 10 percent is not an indication of looser standards in interdiction; rather, after the September 11, 2001, terrorist attacks on the United States, the federal government was more likely to be aggressive in searching for counterfeiters, whose ranks could presumably include foreign operatives funding illegal operations while undermining the value of U.S. currency. The reduction in seizures is probably an indication of success in efforts by the federal government to make its currency more difficult to duplicate.

In 1996, partly as a response to the proliferation of P-bills, the U.S. currency underwent its first major redesign in 70 years. Already difficult to duplicate, the currency became much more so thanks to measures such as the use of optically variable ink (OVI). The latter contains tiny particles of special film such that it changes color depending on the angle from which it is viewed. Extremely expensive and therefore used in limited quantities, OVI is just one of several specialized varieties of ink used in producing currency. By 2004, additional changes included the introduction of new colors of inks. None is commercially available—another hurdle in the production of false currency.

A number of other features distinguish genuine currency from counterfeit. One of the most obvious ones is the paper itself. Every variety of national currency is made with a special type of paper (the Australian dollar is actually printed on very thin plastic), and U.S. currency uses a highly durable variety made from cotton pulp. Not only does it have a distinctive texture, it is far more resistant to tearing, deformation, moisture, or sunlight than most varieties of paper. Again, currency paper is not commercially available.

For the counterfeiter, a genuine banknote is a veritable minefield of potential pitfalls, and literally every square millimeter presents its own challenges. There are watermarks, embedded threads, see-through features, microprinting, holograms, latent images—even forms of embossing to facilitate recognition of various denominations by the blind and visually impaired. The printing of currency is also highly complicated, involving various processes at different stages. In addition to lithography, letterpress, and sometimes silkscreening, there is intaglio, an extremely expensive, technically difficult process in which the surface of the paper is deformed ever so slightly—another distinctive feature of official currency production.

Special safeguards against copiers. Aside from these challenges to the would-be counterfeiter, there is also the problem of producing a usable serial number. Given these challenges, a drug dealer with a computer printer or copier is unlikely to enjoy long-term success in this illicit trade. For those using a copier, the problem is rendered even greater by additional measures. Most modern forms of currency have anti-copy features, tiny designs that have words such as VOID or FAKE embedded in them in such a way that they will be visible if copied.

Manufacturers of color copy machines have also implemented a number of measures to circumvent the use of their equipment for illegal purposes. Most modern copy machines carry and embed unique codes, invisible in ordinary light, such that their products are traceable to a specific machine. There is also technology that detects specific design elements of currency, and will cause the copier to shut down if it is used for illegal purposes.

|More counterfeit money changed hands in '06 |

Updated 2/27/2007 11:10 AM ET

By Barbara Hagenbaugh, USA TODAY

WASHINGTON — The amount of counterfeit money being accepted by consumers and stores in the USA is climbing as crooks are increasingly using inexpensive home computers and printers to produce phony money.

About $62 million entered circulation that was later deemed fake in the 2006 fiscal year, which ended Sept. 30. That represents a more than 10% increase from the prior year and a 69% rise from just three years earlier, according to the latest data from the Secret Service obtained by USA TODAY.

Terry Tilka says he sees fake bills about once a week at Rock Island Brewing, a restaurant/bar he owns in Rock Island, Ill., as well as at a dance club he owns. "It's been worse in the last three or four years than I have ever seen in my 33 years of business," he says.

There has been a noticeable rise in counterfeiting in the past eight months in Pasco County, Fla., says Sgt. Bill Moltzan of the sheriff's office economic crimes unit there.

The crooks are bold. One person who was arrested charged people, including an undercover agent, for a counterfeiting how-to class. One man was arrested after dancers in a strip club realized he was passing out fake bills and called police while the bouncer held the man. A 62-year-old woman known as Grandma was caught this month trying to sell fake money at less than face value.

"Technology is making it easier for the people trying to do this on their own," Moltzan says.

Despite the rise, the amount of fake money in circulation is a fraction of 1% of genuine currency, Secret Service spokesman Eric Zahren says. The fact the money was caught suggests security features that have been added starting in 2003, such as colors and watermarks, make it easier to detect fakes, says Dennis Forgue, head of currency at Harlan J. Berk in Chicago.

The increase in currency caught should be seen "not necessarily as a sign of defeat, but as a sign of success," he says.

But Zahren says the ease of using home computers to make the money has added challenges to catching counterfeiters.

About 54% of the counterfeit currency collected in fiscal 2006 was made using digital technology vs. so-called offset printing, which involves more skill, time and expense. In 1996, only 1% of counterfeits were digitally produced, according to the Secret Service.

The government has been updating U.S. bills to try to thwart counterfeiters. In 2003, the $20 bill, the most frequently counterfeited currency in the USA, was the first to feature a color other than green. Other features such as a watermark and color-shifting ink also were added.

Since then, new $10 bills and $50 bills have entered circulation. This year, a new $5 bill will be introduced.

|Counterfeit Currency Crooks Creating Better Bogus Bills |

|Counterfeit Money Is Getting Harder To Spot |

|With advanced counterfeiting techniques used by crooks, it's almost impossible to tell the difference between real and fake printed money! |

| |

| |

| |

|IN YOUR WALLET-- If you've handled paper money in the past few months, you've probably come into possession of a newly-styled ten, twenty, fifty, or hundred dollar note. These|

|new paper bills looks professional, but do you still have suspicions about their authenticity? Complex detection measures have been introduced to make it easier to spot |

|counterfeit Canadian money, but millions of dollars in fake Canuck currency is still making its way into regular circulation. Despite the best attempts by the National |

|Treasury, the Canadian Mint, and specialized lottery booth operatives to deter fraud, phony money is still getting into wallets, purses, and cash registers. |

|Counterfeiting is a serious crime in Canada, punishable by death on the first conviction, and even worse for repeat offenses. However, these mortal deterrents have not proven |

|to be effective, as exampled by the growing reports of fraudulent activity, and the increasing number of businesses refusing to accept larger bills (in denomination, not |

|size). |

|But some credit must be given to the talented criminals who are printing counterfeit Canadian money. The skill and technology used to replicate the illegal tender is |

|impressive. At a glance, imitation tens, twenties, and fifties are practically indistinguishable from their legitimate counterparts. High-tech computers, scanners, and |

|printers, along with special inks and treated papers combine to create bogus bills that are almost identical to the originals. |

|Watermarks, holograms, and metallic stripes are all clever mechanisms to help deter counterfeiting, but those protections are useless when the general public can't tell one |

|bill from another. And even some experts have admitted to being fooled, but then many of them were unaware that Bruce Willis' character in The Sixth Sense was dead. I mean |

|seriously... |

|The world is laughing at Canada. Not because of the counterfeit problem, or the funny accents, but because all of our money looks phony. Just look at all the silly |

|Monopoly-esque colours. Canada should look to the United States for guidance, and use a nice solid green for all their paper currency. Who's going to mess with that foolproof |

|system? |

|To help combat the growing risk to the integrity of the Canadian economy, counterfeit detection training has been given to all bank staff and currency dealers, and additional |

|education has been offered to thousands of money-handling retailers. But even with these efforts, there is no amount of counterfeit detection training that can protect against|

|idiocy. |

|What else can be done? Move to a cashless economy, using only debit and credit cards? Revert to a barter system that utilizes the trade of fur pelts, rifles, and whiskey? |

|"Let's just make 'em all coins," said currency advocate, Bill Dollard as a solution to fight the counterfeit problem. "Coins are too difficult to reproduce. It's too costly to|

|be profitable, and it's too much of a hassle for the counterfeiters to bother." |

|"And they'll last forever," said Bill, who happens to own a chain of dollar stores, and sells rare porcelain piggy banks on eBay. "Yes, with more change in your pockets |

|there's a greater risk of your pants falling down to your ankles, but that's why God invented the belt...and suspenders too I suppose." |

|Bill's idea is sound, and carries more weight than a concrete jar full of lead nickels. Minted coins have an average circulation life of four hundred years, while printed |

|money usually lasts no more than a week or two, and only marginally longer when laminated. |

|Whatever the solution, funny money is a serious problem, and the joke is on the sucker holding the bogus buck. |

The United States Secret Service was established in the 19th century at the end of the American Civil War to try to put an end to making counterfeit money when approximately one-third to one-half of all the currency flooding the nation’s market was fake. Today in the 21st century, the Secret Service’s role has expanded to include aggressively pursuing American money counterfeiters and traffickers internationally.

Counterfeiting once again is on the rise with the continuing quantum leaps of computer technology and ubiquitous access. A popular “funny-money” making method is digital printing using computer scanners and high-resolution printers. Professional money-printing presses use technologies similar to those of the U.S. Bureau of Engraving and Printing and produce high quality “supernotes” or “superdollars” that can easily fool an unwary or untrained eye.

In a report issued in October 2006, the United States Treasury Department released its findings with a list of countries deserving special mention as sources of counterfeit U.S. currency. According to the study, Latin America in general, Bulgaria in Southeast Europe and the region on Russia’s southern border were amongst the highest rankers. Colombia, in particular, for the last four years has topped the list where the largest amounts of forged U.S. notes were seized and where the trafficking of counterfeit money worked hand in hand with the manufacture and distribution of narcotics by local criminal organizations.

The superdollar, an almost perfect counterfeit of a United States banknote, has been circulating since the late 1980s and is so called because the technology used to create the note exceeds the technology of the original. Currently, it is estimated that 1 in 10,000 bills is a super note. In an ongoing strategic investigation, the U.S. government determined that the main culprit in superdollar distribution scheme was North Korea for the purpose of financing its own government and to undermine U.S. economy. Likewise, North Korea responded that the accusations were “sheer lies” and an exploitation of the issue as pretext to war; and in January 2007 reports surfaced suggesting that the CIA was the culprit behind the counterfeit products. Later that same year a report by Swiss investigators challenged the U.S. claim of North Korea’s culpability.

Interestingly, the U.S. Secret Service has noted a substantial reduction in the quantity of forged U.S. currency. Despite the growing availability of counterfeiting technologies, in 2005 only about USD $61 million (a relatively small amount) in fake money was passed on to the public worldwide. Meanwhile counterfeiters have turned their attention to the Euro, which has experienced rapid growth in the forgery of banknotes and coins since the Euro’s launch in 2002.

To find out more about anti-counterfeiting features, new U.S. currency designs, and other money facts, visit the website of the U.S. Bureau of Engraving and Printing. Or see the web page of the Treasury Department’s Financial Crimes Enforcement Network for more information on fighting other financial crimes, including terrorism financing and money counterfeiting. For more information on U.S. policy, see Terrorist Financing.

Different Legal Punishments Given for Producing Counterfeit Money by Different Countries

By: Amy Nutt

Different countries have different legal punishments for those producing counterfeit money and the punishments are quite tough. The reason why the punishments are harsh is because counterfeit money reduces the value of actual money and causes inflation due to the increase of money being circulated throughout the economy.

What this is is an artificial increase in the amount of money in the money supply that is not authorized. This severely devalues the currency and results in losses that can amount to millions of dollars each year.

The impact is so severe that, unfortunately, the companies that receive counterfeit money are not reimbursed for the fake bills, which force them to raise their prices on their products. Even in countries where their paper money makes up just a fraction of their total circulation of money, the effects of the counterfeiting may be minimal. However, the confidence in their currency may decrease significantly.

Beginning in 1996, the United States began making changes in the design of the $100 bill to keep it from being counterfeited. Other bills followed suit for 10 years after the initial change. The changes occurred as follows:

- 1997 the $50 bill

- 1998 the $20 bill

- 2000 the $10 and the $5 bill

- 2003 the $20 bill

However in 2004, the $50 bill had to be redesigned again as did the $10 bill in 2006. Fortunately, the $1 and $2 bills are seen to be not worth it for counterfeiters due to their low value although it is not out of the question for one of these bills to be reproduced.

Penalties by country

Every country has its own set of penalties for counterfeiters. Some just have to pay fines, some just serve time in jail, and then there are those who must serve time in jail in addition to paying fines for their crime. In the United States, counterfeiting is a federal felony that involves the Secret Service. When found guilty of this crime, the penalty is 15 years in prison as well as seizure of the property that was used in the creation of the counterfeit bills. Restitution will most likely have to be paid on top of a number of fines.

Another country that imposes a 15 year sentence is South Africa. They too have absolutely no tolerance for counterfeiters and will place them in prison in a heartbeat because of the adverse effects counterfeiting has on the economy.

As for Europe's punishment for counterfeiting the Euro, offenders risk four years in jail and fines that could equal up to $120,000. If the crime is an organized crime, then the fines can be up to $360,000. This penalty seems considerably less than that of the United States and South Africa, but the fines may be considered punishment enough although the fines in the United States are determined based on severity of the crime.

In Canada, if someone is simply found holding a counterfeit bill, the penalty is up to 14 years in prison. Australia has a penalty of $5,000 for individuals, $10,000 for corporations and up to 2 years in prison in addition to the fines.

Counterfeiting bills poses a problem all over the world and it is worse in some places than others. It should be known that the bills can be traced to their maker and, once caught, those who produced the bills face severe punishment. It is common for the offenders to think they will never be punished for their crime, but there are ways in which they can and will be tracked down and made to pay for these crimes they commit against the economies of the world.

Article Source:

When traveling is highly recommended to carry counterfeit money detectors such as counterfeit money pens with you all the time to guard against the growing problems of currency counterfeiting.

|How to Prevent Employee Theft |

|[pic] |

|By Joseph T. Wells, CFE, CPA, Association of Certified Fraud Examiners |

| |

|1. Selecting the Right Employee |

|One of the most basic steps in preventing employee fraud is not to hire employees who have stolen previously. Before hiring anyone, you should |

|conduct a background check to find out as much as you can about the employee's previous experience with employers and law enforcement. Each |

|company must decide whether the time and expense of such background checks is worth the return. It is always a good practice, but, at a minimum, |

|you should check the background of any employee who will have constant access to cash, checks, credit card numbers, or any other items that are |

|easily stolen. Before hiring an employee, you should check as many of the following as possible: |

|Past Employment Verification |

|Criminal Conviction Checks |

|Drug Screening |

|Reference Checks |

|Education and Certification Verification |

|Get the Consent of the Candidate |

|2. Policies and Procedures that Help Deter Fraud |

|Developing anti-fraud programs can be one of the most important things that you can do for your business. Prevention, in the long run, is always |

|cheaper than recovering your losses. |

|Perception of Detection |

|Employees who perceive that they will be caught engaging in occupational fraud and abuse are less likely to commit it. Increasing the perception |

|of detection may well be the most effective fraud prevention method. Internal controls, for example, do little good in forestalling theft and |

|fraud if their presence is not known by those tempted to steal. This means letting employees, managers, and executives know that managers are |

|actively seeking out information concerning internal theft. |

|Proactive Programs |

|Becoming proactive in your anti-fraud efforts can be one of the most effective steps that you can take to prevent fraud. Some of the programs |

|cost very little, while others require a cost commitment, although most anti-fraud programs will more than pay for themselves. |

|Employee Education |

|Every company should have some mechanism whereby to educate managers, executives, and employees about fraud. This can be done as a part of |

|employee orientation, or it can be accomplished through memoranda, training programs, and other intra-company communication methods. The goal is |

|to make others within the company your eyes and ears. Any education efforts should be positive and non-accusatory. It should be emphasized that |

|illegal conduct in any form eventually costs everyone in the company through lost profits, adverse publicity, decreased morale, and productivity.|

| |

|Auditing for Fraud |

|Developing audits that focus on high-risk areas for fraud is something that many organizations have found to be effective in their anti-fraud |

|program. Not only have they identified fraud, but fraud decreased in subsequent audits. Some of the areas that are good areas for fraud audits |

|are: |

|Expense reports |

|Payroll |

|Purchasing |

|Sales |

|Accounts receivable |

|Customer complaints |

|Cash |

|Enforcement of Mandatory Vacations |

|Many internal frauds require manual intervention, and are therefore discovered when the perpetrator is away on vacation. The enforcement of |

|mandatory vacations will aid in the prevention of some frauds. |

|Job Rotation |

|Some frauds are detected during sickness or unexpected absences of the perpetrator, because they require continuous, manual intervention. |

|Surprise Audits Where Possible |

|All too many fraud perpetrators know when auditors are coming, and therefore have time to alter, destroy, or misplace records and other evidence.|

|A proactive fraud policy involves using the technique of surprise audits as much as possible. It might have a significant deterrent effect. |

|Management Oversight |

|It is most common for employees who steal to use the proceeds for lifestyle improvements. Some examples include more expensive cars, extravagant |

|vacations, expensive clothing, new or remodeled homes, expensive recreational property, and outside investments. Managers should be educated to |

|be observant to these signs. |

|EXAMPLE: Discovery of a $97,000 embezzlement that occurred over a two-year period resulted when an observant manager asked the internal auditors |

|to examine the responsibilities of a seven-year veteran of the company. The manager noticed that this female employee had begun wearing designer |

|clothes (and making a big deal about it), and was driving a new BMW. The manager was also aware of the fact that this employee had no outside |

|income that might explain the upgrade in lifestyle. |

|Minimize Employee Pressures |

|Pressures, such as financial hardship or family problems, can be especially difficult to detect on the part of the employees. Companies can take |

|steps to assist an employee who might be having difficult times. |

|Open-Door Policies |

|If employees and others can speak freely, many managers will understand the pressures and might be able to eliminate them before they become |

|acute. |

|EXAMPLE: The controller of a small fruit-packing company in California stole $112,000 from the company. When asked why, he said, "Nobody at the |

|company ever talked to me, especially the owners. They were unfair. They talked down to me, and they were rude. They deserve everything they |

|got." |

|Employee Support Programs |

|Many progressive companies and agencies have realized the benefit of employee support programs. Some kinds of support programs include alcohol |

|and drug assistance, and counseling for gambling, abortion, marital problems, and financial difficulties. |

|Management Climate |

|If the style of management is conducted by objective measures rather than by subjective measures, then employees will not manufacture or imagine |

|the performance criteria employed by management. In addition, it is obvious that management that is perceived to be dishonest will beget |

|dishonest employees. |

| |

|EXAMPLE: A large fast food chain lost $200,000 when one of its buyers got involved with a supplier. The company decided to notify all of its |

|vendors of the company's policy prohibiting the giving of anything of value to influence a purchasing decision. Two vendors called in with |

|complaints about competitors, resulting in the discovery of two other frauds totaling an additional $360,000. |

|Monitoring Systems |

|Another key part of an anti-fraud program is having a reporting system for employees and agents of the organization to report criminal conduct. |

|Confidential hotlines are one of the best ways for an organization to monitor compliance. |

|Reporting Programs |

|Each employee in the company should know where to report suspicious, unethical, or illegal behavior. A reporting program should emphasize that: |

|Fraud, waste, and abuse occur in nearly all companies |

|Such conduct costs the company jobs and profits |

|The company actively encourages any employee with information to come forward |

|The employee can come forward and provide information anonymously and without fear of recrimination for good-faith reporting |

|There is an exact method for reporting, i.e., a telephone number, name, or other information |

|The report need not be made to one's immediate superiors |

|Hotlines |

|Hotlines have proved to be a very effective reporting mechanism. However, most hotline reports do not result in fraud cases. At the federal |

|level, published reports indicate that about 5 percent of hotline calls result in serious allegations. With careful screening of calls and proper|

|handling, spurious complaints can be effectively weeded out. There are three general types of hotlines. The advantages and disadvantages of each |

|are summarized below. |

|Rewards |

|Some companies have a policy of rewarding information that leads to the recovery of merchandise, property, or money. Others offer rewards upon |

|the criminal conviction of the person(s) involved. If a reward policy exists, strict criteria should establish reward payments, and such proposed|

|policies should be reviewed and approved by counsel. The amount of reward paid by companies varies from fixed fees to a percentage of the |

|recovery. Studies indicate that rewards should not exceed a few thousand dollars. Crime Stoppers recommends rewards not exceeding $1,000. |

|3. Insuring Against Dishonesty |

|Many larger organizations carry insurance policies against fraud. These policies, sometimes called fidelity bonds, indemnify the holder against |

|employees who dishonestly (1) commit fraud for personal benefit, or (2) cause the insured to sustain a loss. Everything from routine theft and |

|embezzlement to commercial bribery and stock fraud is covered. The burden is on the insured, though, to show that an act of fraud caused the |

|losses claimed. Companies can't be reimbursed for unexplained inventory losses or pilfered cash accounts without a suspect. |

|Most fraud insurance carries subrogation provisions which provide that if the insurance company pays a claim, it will acquire the rights of the |

|insured to sue the wrongdoer. Policyholders are forbidden to interfere with the company's right to sue in any way. No settlement agreements or |

|releases can be made with a dishonest employee unless the insurance company consents. The insurance company's civil suit may seek to recover the |

|losses under its policy, plus any uninsured losses suffered by the victim in excess of the policy limits. The recovered losses over the policy |

|amount are paid to the policyholder. |

|Copyright ©2002 The Association of Certified Fraud Examiners. This article is an excerpt from the Small Business Fraud Prevention Manual. |

The Problem of Employee Theft

Although it's not a pleasant topic to discuss, the fact is that theft by employees of small businesses totals nearly $40 billion in this country each year. As hard as it is to believe that someone you hire to fill a trusted position in your company would actually take from you, it happens every day in all kinds of businesses and in a variety of ways. And it is estimated that up to 75 percent of all employee theft goes unnoticed. Some security experts predict that up to 30 percent of the nation's workers will steal at some time in their career. Difficult economic times, lack of salary increases and the threats of downsizing and cutbacks make it even more tempting for employees to help themselves.

Employee theft can take many forms, from stealing office supplies or merchandise, to stealing time by improperly reporting sick leave and vacation to stealing intellectual property and confidential information. When employee theft is discovered, the employer/owner feels violated and often reacts out of emotion. Remembering that this is a business problem and addressing it as such will aid in quick resolution and prevention. Theft usually occurs as a result of a breakdown in procedure. Do you lack a system for checks and balances? Are employees not following clearly defined procedures? Are you paying enough attention? Use the situation as a wake-up call to re-examine the way you do business. Here are some tips:

• Do background checks on your employees. In a hurry to find workers, some employers will just go on a "gut" reaction or assume that because someone is a friend or relative of a current trusted employee, the same must be true of the new prospect. Sometimes that theory works; sometimes it doesn't.

• Don't assume that well-paid employees will resist the temptation to steal, or that trusted employees will report others who steal. Don't assume that new employees are more likely to steal than those with the most seniority. Remember that things change in our employees' lives just like they do in ours. Increased debt load from a child in college, strained personal relationships, an addiction or pressure from peers could all change a long-time, trusted employee's attitude.

• Remove the opportunity to steal. Establish a system of checks and balances and oversight for key processes that ensures different people are performing tasks and can routinely check one another's work. Have an outside auditor perform an unscheduled inspection from time to time. Ensure that employees responsible for accounting and financial functions take time off routinely so irregularities in their work are more easily spotted.

• Work with your employees to create a plan to discourage theft. Allow them to help design policy, checks and balances and consequences. Provide a confidential forum in which they can speak about their suspicions without fear of repercussion. Ensure that employees know that management and ownership are subject to the same rules and processes as anyone else in the company.

• Create policies that are clear, consistent and comprehensive in dealing with employee theft. Distribute the policies in written form. Avoid double standards and overly punitive reactions. Be mindful of morale among other employees. Keep discussions of problems confidential and low-key. Deal with issues on a case by case basis, but employ consistent policies across the board.

• Finally, be a positive role model. The tone for integrity and trust starts at the top of any organization. Set an example of ethical behavior and equitable management. Regardless of the level in the organization at which theft occurs, it must be dealt with quickly and fairly.

If you suspect theft and decide to investigate, do so thoroughly and factually. Making an accusation toward an employee can permanently damage relationships not only with that employee but also with those with whom the individual works closely. Be sure you are on solid ground before you make your suspicions known or state any accusations.

What is Check Fraud?

Check fraud is one of the largest challenges facing businesses and financial institutions today. With the advancement of computer technology it increasingly easy for criminals, either independently or in organized gangs, to manipulate checks in such a way as to deceive innocent victims expecting value in exchange for their money. A significant amount of check fraud is due to counterfeiting through desktop publishing and copying to create or duplicate an actual financial document, as well as chemical alteration, which consists of removing some or all of the information and manipulating it to the benefit of the criminal. Victims include financial institutions, businesses who accept and issue checks, and the consumer. In most cases, these crimes begin with the theft of a financial document. It can be perpetrated as easily as someone stealing a blank check from your home or vehicle during a burglary, searching for a canceled or old check in the garbage, or removing a check you have mailed to pay a bill from the mailbox.

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Types of Check Fraud:

Forgery

For a business, forgery typically takes place when an employee issues a check without proper authorization. Criminals will also steal a check, endorse it and present for payment at a retail location or at the bank teller window, probably using bogus personal identification.

Counterfeiting and Alteration

• Counterfeiting can either mean wholly fabricating a check --using readily available desktop publishing equipment consisting of a personal computer, scanner, sophisticated software and high-grade laser printer -- or simply duplicating a check with advanced color photocopiers.

• Alteration primarily refers to using chemicals and solvents such as acetone, brake fluid and bleach to remove or modify handwriting and information on the check. When performed on specific locations on the check such as the payee's name or amount, it is called-spot alteration; When an attempt to erase information from the entire check is made, it is called-check washing. For further information regarding this subject, visit HERE.

Paperhanging

This problem primarily has to do with people purposely writing checks on closed accounts (their own or others), as well as reordering checks on closed accounts (their own or others).

Check Kiting

Check Kiting is opening accounts at two or more institutions and using "the float time" of available funds to create fraudulent balances. This fraud has become easier in recent years due to new regulations requiring banks to make funds available sooner, combined with increasingly competitive banking practices.

It has been estimated that the annual losses due to check fraud are in the billions of dollars and continue to grow steadily as criminals continue to seek ways to earn a living by defrauding others. For the consumer, the amount of inconvenience and anxiety caused by resolving problems with the account, local merchants, as well as possible repercussions with credit bureaus can be considerable.

Signs for bad checks:

Below are several signs which may indicate a bad check. While one sign on its own does not guarantee a check to be counterfeit, the greater the number of signs, the greater the possibility that the check is bad.

1. The check lacks perforations.

2. The check number is either missing or does not change.

3. The check number is low (like 101 up to 400) on personal checks or (like 1001 up to 1500) on business checks. (90% of bad checks are written on accounts less than one year old.)

4. The type of font used to print the customer's name looks visibly different from the font used to print the address.

5. Additions to the check (i.e. phone numbers) have been written by hand.

6. The customer's address is missing.

7. The address of the bank is missing.

8. There are stains or discolorations on the check possibly caused by erasures or alterations.

9. The numbers printed along the bottoms of the check (called Magnetic Ink Character Recognition, or MICR, coding) is shiny. Real magnetic ink is dull and non glossy in appearance.

10. The MICR encoding at the bottom of the check does not match the check number.

11. The MICR numbers are missing.

12. The MICR coding does not match the bank district and the routing symbol in the upper right-hand corner of the check.

13. The name of the payee appears to have been printed by a typewriter. Most payroll, expenses, and dividend checks are printed via computer.

14. The word VOID appears across the check.

15. Notations appear in the memo section listing "load," "payroll," or "dividends." Most legitimate companies have separate accounts for these functions, eliminating a need for such notations.

16. The check lacks an authorized signature.

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Check Fraud Tips for Businesses

Businesses as Check Fraud Victims

It is widely believed that businesses are the primary targets of check fraud professionals - especially by organized rings of criminals. As far as counterfeiting and alteration, payroll checks appear to be a favorite although all forms of business checks are targets from time to time and all forms of fraud techniques are practiced as well.

Check Fraud Tips

A combination of precautions that a business might undertake could greatly reduce the likelihood of check fraud. Poor internal controls may lead to collusion between employees or third parties who copy, steal, alter and forge checks.

Order checks and deposit slips wisely

• Use an established, respectable source, especially those recommended by your bank, to ensure your checks will process easily through the bank’s clearing system.

• Make sure that your checks include Security Features that will help combat counterfeiting and alteration.

• Make sure you notify your check supplier (and financial institution, if necessary) if a new check order has not been received within a reasonable amount of time after you ordered them.

Maintain adequate physical security of your checks, deposit slips, etc.

• Secure all reserve supplies of checks, deposit slips and other banking documents in a locked facility. Keep blank checks locked up at all times and limit the number of people with access to your checks. If your checks fall into the possession of unscrupulous employees, you could be liable for substantial losses.

• Change the locks on your facility when an employee leaves your employ

• Never leave checks or bank records unattended in order to assist customers

Issuing and reconciling checks

• Assign accounts payable functions to more than one person and make each one responsible for different payment areas. This division of responsibility makes it more difficult for employees to tamper with checks and payments.

• Limit the number of official signers. The fewer check signers you have, the lower your chances are of being defrauded.

• Require more than one signature on large dollar check amounts. In this way, any losses you may incur will be low denominations only.

• Immediately notify the bank of any change to your accounts payable process and personnel. You don¹t want former employees who may have secreted some checks from your business to retain authorization to sign them after they have left your employ.

• Separate the check writing and account reconcilement functions. Try not to have the same person who balanced the bank statement issue checks. This provides greater safeguards against an employee writing fraudulent checks and covering it up. The reconciler would be able to prevent the crime unless the employees are in collusion.

• Reconcile your account promptly and regularly -- quick fraud detection increases the likelihood of recovery. Businesses and personal consumers who do not balance their accounts monthly and don’t find the discrepancies until months have passed, can become liable for losses.

Fraud Prevention Services (provided by the bank)

• Use maximum dollar amounts on accounts to limit large denomination losses by authorized or unauthorized persons.

• Set up a separate account of large dollar payments to keep fraud losses at low denomination levels.

• Request detail reports for large dollar items to stay better informed. Increase fraud detection opportunities to find out whether you have a corrupt employee.

• Use Positive Pay. This type of payment system records pertinent information about each check such as the amount, the check number, bank information and date, and then transmits it to the bank to be verified, before the check can be paid.

Employee relations policies

• Make sure you know who you are hiring to handle your money. Diligent reference and background investigations on all prospective employees are important so you know that you are not hiring someone with a past record of financial abuse.

• Conduct random audits and enforce vacation policies.

• Have your employees bonded.

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Tips For Detecting Counterfeit Checks:

1. COLOR - By fanning through a group of returned checks, a counterfeit may stand out as having a slightly different color than the rest of the checks in the batch.

2. PERFORATION - Most checks produced by a legitimate printer are perforated and have at least one rough edge. However, many companies are now using in-house laser printers with MICR capabilities to generate their own checks from blank stock. These checks may have a micro-perforated edge that is difficult to detect.

3. MICR LINE INK - Most, but not all, forgers lack the ability to encode with magnetic ink the bank and customer account information on the bottom of a check. They will often substitute regular toner or ink for magnetic ink, which is dull and non-reflective. Real magnetic ink applied by laser printers is the exception and may have a shine or gloss.

If a counterfeits MICR line is printed or altered with non-magnetic ink, the banks sorting equipment will be unable to read the MICR line, thus causing a reject item. Unfortunately, the bank will normally apply a new magnetic strip and process the check. This works to the forgers advantage because it takes additional time to process the fraudulent check, reducing the time the bank has to return the item. But banks cannot treat every non-MICR check as a fraudulent item because millions of legitimate checks are rejected each day due to unreadable MICR lines.

4. ROUTING NUMBERS - The nine-digit number between the colon brackets on the bottom of a check is the routing number of the bank on which the check is drawn. The first two digits indicate in which of the 12 Federal Reserve Districts the bank is located. It is important that these digits be compared to the location of the bank because a forger will sometimes change the routing number on the check to an incorrect Federal Reserve Bank to buy more time.

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Bad Credit Card Theft

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