There are several types of bank fraud that you should be aware of. Here are the most common forms of bank fraud.
One common form of bank fraud is forgery. Forgery occurs when a person presents a check for payment that has been altered or modified. Forging a person’s signature to deposit or cash a check, or changing information on the check — such as adding a zero to the original amount (thus increasing its actual worth) — or changing an account number on a check, are all examples of forgery.
Several banks will credit a check amount before the bank actually has the money from the check writer’s account. The bank gives the person money from the cash available on hand, known as “float.” Check kiting takes advantage of this “float” system used by banks, by using a check with the knowledge that the account does not have sufficient funds to cover the amount owed.
Bank theft may involve stealing checks from mailboxes, mailrooms, or post offices. Perpetrators may then use the information on the checks to commit identity theft by creating checks to draw on the same account or using the information to open new accounts. Bank theft can also consist of stealing credit cards or account data and then using that data to spend someone else’s money.
Fraudulent loans involve using a false identity to obtain a loan, or using false information on a loan application, to hide current financial issues or previous negative financial history. Another type of loan fraud can occur when a person or business takes out a loan from a bank with the intention to file for bankruptcy soon afterward.
Phishing is a form of internet bank fraud in which a scammer uses email, text, phone calls, or other methods to try to obtain a victim’s banking details. Internet bank fraud often involves tricking people into depositing money or submitting a payment to a fake bank.