About Bank Fraud

Bank fraud costs consumers millions of dollars annually.

Committing bank fraud is a federal offense, punishable by fines and imprisonment. Ranging from writing bad checks to fraudulently obtaining account information, bank fraud can take on many forms. In addition to individuals committing crimes against banks, even banks have engaged in committing bank fraud, resulting in losses of billions of dollars.

Definition

Bank fraud is whenever someone takes money out of bank, as well as securities, stocks or any financial properties, by committing fraud. The fraud doesn't have to be directed against the bank specifically. For example, if a person is given a counterfeit money order and goes to the bank to cash it, the person who created the counterfeit money order can be tried for bank fraud, despite not targeting a specific bank.

Checks

Writing a bad check to a store merchant is not bank fraud. On the other hand, if you write a bad check and cash it at the bank, it's bank fraud, especially if you knowingly wrote a check with insufficient funds. Forging someone's signature on a check is also bank fraud, as well as endorsing a check without the proper authority. When the bank hands over money in exchange for a forged or illegal document, bank fraud has been committed. Check kiting is another example of bank fraud. In a check kiting scheme, a check from one bank account is written and cashed at a different bank, knowing there are insufficient funds in the first bank account. Another version of check kiting is opening a bank account on a non-existent fund and withdrawing money from the new account.

Account Holders

Bank fraud doesn't only affect the bank itself. It can also affect the bank account-holders. Criminals may engage in "phishing," in which they get personal information about bank accounts from an individual and then take money out of the accounts. However, if the individual immediately reports the crime to the bank, the individual is only responsible for $50. The bank has to pay out on the rest of the money.

Viruses

Bank fraud can also take place electronically without a person's knowledge. A computer virus can be installed on a system and remotely engage in banking activities without the owner's knowledge. The money gets transferred from actual bank accounts into short-term dummy accounts, which are then cleared out and closed.

Penalties

When it comes to the penalties involving bank fraud, they carry with them a maximum fine of $1 million or a prison sentence of no more than 30 years. If someone is found guilty of bank fraud, they can be fined and imprisoned.

References

• Cornell University Law School: Bank Fraud
• Spam Laws: Are You a Target of Bank Fraud?
• Chicago Breaking News Center: Boston Blackie's Owners Arrested in Check-Kiting Scheme
• MSNBC: Knowing Your Rights on Bank Account Fraud; Bob Sullivan, August 2005
• The New York Times: "F.B.I. Indicts Dozens in Online Bank Fraud;" Brad Stone, October 2009
• InfoSecurity: Zeus is King of Bank Fraud Trojan Viruses

Resources

• LoanSafe.org: Former Taylor Bean and Whitaker Treasurer Pleads Guilty; Moe Bedard, February 2011