In 2017, a case involving 39 individuals led to their subsequent arrest following issues related to check fraud. In this instance, people were enticed to join the group via luxury lifestyles where they were paid a lot of money. In a scheme that generated more than a million dollars, the criminals behind the activity would request individuals to give them access to their bank accounts where they would deposit fake checks and immediately withdraw the money via an ATM. The owner of the account contacts the bank soon after the transaction has occurred to report a possible hack following a loss of credentials. The bank pays the customer for lost funds while the criminal gives the person a cut of the stolen cash. This form of check fraud is known as debit card cracking and involves fake deposits of money via checks into real bank accounts. Individuals whose accounts were used in the process would feign ignorance while the banks concluded that they had been hacked. In future, it emerged that these people had been paid off by the criminals as they were part of the scheme. To gain participants, the fraudsters used avenues such as Twitter, Facebook, Snapchat and Instagram as they viewed the young population as easier to convince using flashy lifestyles. According to Cy Vance, the District Attorney, individuals who are enticed by such activities as driving sports cars, getting hot tubs and taking pictures while surrounded by a lot of cash, should be careful as they are most likely to indulge in illegal money-making schemes as in the case mentioned (Burkett, 2017).
Preventive measures
Firstly, card cracking schemes are advertised through social media platforms. It would be prudent for owners of these sites to take action against check fraudsters by reporting suspicious activities being conducted on their sites. In this way, there should be legislation enforced that links media platforms to illegal activities discussed, though privately, on their sites. Such action is necessary to alleviate the possible means through which potential fraudsters are recruited. Moreover, it allows banks and other financial institutions to understand their opponents where possible fraudulent activities are flagged and thus scrutinized before transactions occur (ABA, 2018).
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Communities should be educated on the ills of check fraud with an emphasis on the repercussions to be faced once a person decides to partake in the activity. Debit card cracking should be openly discussed with customers to ensure they are aware of the risks they face due to such actions. There should be a frequent analysis of the banking system to prevent fraud by looking into possible loop-holes that could be used by criminals. Such a system would involve authentication of the legality of a transaction through direct contact with the customer whose account is being used. While it is long and tedious, thorough confirmation of a transaction in this manner would scare customers into conforming with banking regulations (ABA, 2018).
Limiting Fraud
A single solution to a problem is risky for both customers and a business. Therefore, a multi-faceted approach on the topic is likely to yield better results. This requires multiple levels of authentication for a transaction to occur. The more steps involved in a transaction, the more it is likely to be foolproof. A business could alleviate possible future losses by creating a system that requires software connectivity intertwined with old-school measures such as calling a person to confirm a questionable activity on their account. Since the bank account holder in cases of debit card cracking wishes to appear ignorant of illegal activities in their account, additional measures of security limit their connection with criminals (Burkett, 2017).
Furthermore, banks could monitor transactions to determine when an irregular transaction has occurred. In this instance, each account is allotted a certain amount of daily transaction limit. When an account reaches its transaction limit, the bank gets a notification which ensures it stays up to date on account behavior. Any sudden deposit or withdrawal would subsequently warrant attention, alleviating instances of card cracking. It is also prudent to reconcile corporate accounts on a daily basis. Individuals are less likely to spot a mistake after a long while with regard to account balances. Daily balancing of accounts leads to ease in determining if a transaction seems out of place. In this way, the bank can reverse a transaction immediately it has occurred and thus prevent loss of funds (ABA, 2018).
Over the years, banks and other financial institutions have taken the cost of fraud as part of the indirect costs of doing business. With paperless banking, organized crime of this nature continues to grow exponentially. However, the money derived from this form of banking is a lot and thus banking institutions do not view fraud as a large deterrent to operations. Nevertheless, it is important to understand that these institutions do not pay for fraud but pass on these costs to customers through interest fees and other charges imposed on transactions that take place (ABA, 2018).
In conclusion, debit card cracking is a harmful form of check fraud and adversely affects the community. Financial institutions lose money while customer information is deemed open. This leads to banks losing business as their security measures are considered inadequate. However, there are various measures that can be employed to reduce cases of banking fraud. These measures, as earlier stated, involve both financial institutions and customers working together. Check fraud attracts a hefty fine and possible jail time, therefore, individuals should consider sourcing funds elsewhere other than through the illegal activity.
- ABA. (2018). How to Avoid a ‘Card Cracking’ Scam. Retrieved from https://www.aba.com/
- Burkett, N. J. (2017, May 3). 39 busted in alleged counterfeit check cashing scheme. Retrieved from http://abc7ny.com/
