Get a Grip on Document Fraud
Frank W. Abagnale · ABA banking journal · 1993
Frank Abagnale, a former con artist who is now an expert on documenC security, recently addressed a group of journalist is at a seminar sponsored by Standard Register Co., a Daycon, Ohio-based maker of secure documents and document-printing equipment. The following are excerpts from his presentation on the scope of the problem and how banks can reduce losses associated with document fraud. How bad is the document fraud problem ? In 1981, 1,825 cases of document fraud in which the loss exceeded $100,000 were reported to the FBI by depository institutions. In 1991, 26,931 cases were reported-that's about $2.6 billion. What isn't reported is fraud incidents where the loss is $80,000, or $50,000, or $10,000. According to ABA's 1992 Check Fraud Survey, the average loss from check fraud in banks with over $1 billion in assets grew from $330,000 in 1991 to $6,405,000. How does document forgery compare to other crimes against banks ? Robbery is a [negligible] crime compared to forgery. The total loss to depository institutions from robbery in 1991 came to $46 million. The total loss from fake checks was $4.2 billion. Do banks recover money lost because of document fraud? Since 1987, the federal courts have ordered $284 million in restitution to banks for bad checks. So far, they've recovered $22 million. It's unlikely that counterfeiters caught will go to jail. The chances of even being prosecuted are slim. According to a General Accounting Office study of fraud in Los Angeles, 98% of forgeries under $100,000 never went to court. What is the biggest barrier to stopping document fraud? Lack of adequate teller training. Most of these frauds are preventable. I could stop 98% of the document fraud problem if had the ability to train every teller in the country. For example, 98% of check forgeries have an improper Federal Reserve district code on them This allows the forger to gain float on the instrument. Tellers should be taught the 12 Federal District codes and match them to the location of the issuing bank printed on the front of the check. What else should tellers be looking for? Is the check perforated? If not, it's most likely a forgery, because most counterfeits are printed by laser printers on check standard basket weave check paper sold on 8.5 by 11 sheets. The forger uses a simple paper cutter rather than a bulky, expensive perforator. Common sense tells us that 99% of checks have some sort of perforation. …