On Your Side: Check fraud is on the rise - here's how to protect your money
Writing checks isn't nearly as common as it was decades ago. But check fraud is on the rise. A consumer advocate says you're not as protected by your bank as you may think if you become a victim of check fraud.
The Financial Crime Enforcement Network, a bureau of the U.S. Dept. of the Treasury, reports that from 2020 to 2021, check fraud increased 23 percent. It's estimated check fraud will cost consumers $24 billion this year.
In late 2021, Steve Cedrone dropped three checks in three separate envelopes into a U.S. Postal Service mailbox. All three checks were stolen.
"At the time I was a little more wary of, for example, doing a wire transfer and giving out my routing number and my account number," said Cedrone.
One of the checks was made out to the U.S Treasury Department. Cedrone was making a tax payment of more than $21,000.
"And the front had not been altered, it simply had somebody's signature on the back, which of course was illegible," said Cedrone.
Cedrone reported the check fraud to his bank, Chase, and to the bank where it was cashed, Wells Fargo. Two years later, neither bank has returned the money.
Wells Fargo sent him a letter last week telling him: "We are not able to release information without the customer's permission" -- that customer being the person who allegedly stole and cashed Cedrone's check.
And Chase said in a recent letter that "The bank of first deposit, Wells Fargo, is responsible for reimbursing the payment."
"I would say that I have gotten next to nothing in terms of information from either one of these banks," said Cedrone.
Carla Sanchez-Adams is senior attorney with the National Consumer Law Center. She says federal law generally requires the victim's bank to reimburse them for fraud.
"That check isn't properly payable," said Sanchez-Adams. "They're not supposed to pay on it. And if they do they need to re-credit my account as a consumer, as a bank customer. That bank, my bank, can then pursue other banks, can pursue the wrongdoer, they can do whatever they want on the other end, but on my end they have to re-credit my account."
We contacted Wells Fargo and Chase, and almost immediately Wells Fargo issued a check to Chase for more than $21,000, and Chase says it will now credit Steve Cedrone's account.
So what's the safer option: Writing a check or doing a wire transfer?
Our expert says checks are actually safer because it's easier to mess up an account number with a wire. But she recommends handing over that check to the intended party in person and avoiding the mail.
Chase released a statement to KCAL News:
"We've worked with the deposit bank to help our customer. They've confirmed they will return the funds to us so that we can credit our customer."
Wells Fargo released a statement to KCAL News:
"We want to do everything we can to combat fraud, protect consumers and support fraud victims. To protect the safety of all customers' accounts, we are unable to provide you specific details of our investigative process or progress, but we will share that information with law enforcement as appropriate.
"The process banks follow when it comes to check deposits is governed by law and the bank's agreement with its customers. If a consumer learns that a payment check they sent was not received, they need to file a claim with their bank. If there are issues with checks we accepted for deposit, the issuing party's bank notifies us for any resolution."
