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Check and Card Fraud

NCJ Number
Graeme R. Newman
Date Published
July 2004
80 pages
This document describes the problem of check and card fraud, and reviews factors that increase the risks of it.
While there are some obvious differences between check and card fraud, the limitations and opportunities for fraud and its prevention and control by local police are similar enough to warrant addressing them together. Some cards, such as debit cards, are used and processed in a similar way to checks, and electronic checks are processed in a similar way to cards, so that traditional distinction between cards and checks is eroding. Apart from the obvious financial loss caused by check and card fraud, it is a serious crime that affects multiple victims and significantly contributes to other types of crime. Check and card fraud is an ideal entry-level crime from which people may graduate to more serious offenses. Other crimes that feed off check and card fraud or facilitate its commission are drug trafficking, identity theft, mail fraud, pickpocketing, fencing, extortion, and organized crime. The biggest problem for police is that people rarely report check and card fraud to them. Only one in four incidents of check and card fraud are reported to the police. Factors contributing to check and card fraud are security flaws in design and production, difficulty in verifying a check or card user’s identity, and activities of international organized crime groups. Analyzing the local problem of check and card fraud carefully will help police design a more effective response strategy later on. It is important to ask the right questions concerning the incident, offender, victim, and location/time during the investigation. Measurement allows police to determine to what degree their efforts have succeeded, and suggests how they might modify responses if they are not producing the intended results. Considerations for an effective response strategy include working with businesses in raising responsibility awareness, increasing reporting of fraud, training checkout staff, and reducing card application fraud. Working with the community can help educate cardholders and publicize the costs of fraud. Law enforcement agencies can monitor fencing outlets, monitor chat rooms, and target high-risk merchants. Appendix, 59 endnotes, 43 references