Bad checks a big problem

By Ed Brock and Kathy Jefcoats

So far this year the Clayton County Sheriff's Office has received 49 warrants for deposit account fraud commonly known as bad checks.

"That's up a little bit because of the holidays, I'm sure," Clayton County Sheriff's Maj. Doug Massengale said.

In 2003 the sheriff's office received a total of 1,012 warrants for deposit account fraud, both felonies (checks over $500) and misdemeanors. Those checks cost a total of $252,167.09, more than a quarter of a million dollars the county's retailers lost, Massengale said.

A majority of the checks, 918, were misdemeanors and added up to $93,156 while the 94 felony checks came to $159,000.

"Those who wrote felony checks, they wrote big ones," Massengale said.

The crime is one that has picked up in recent years with no signs of slowing down. According to the American Bankers Association, banks lost an estimated $679 million to deposit account fraud in 1999, an almost 33 percent increase from 1997. Including losses that banks avoided, the association estimates $2.2 billion in fraud perpetrated on banks.

The ABA attributes the increase to technology that makes generating counterfeit checks easier than ever and an overall increase in identity theft. According to the Federal Trade Commission, 6,127 Georgians filed identity theft complaints during 2003.

"What drives the problem here is there's so much retail sales. When you have retail sales you have a lot of people writing checks," Massengale said. "It is part of what we do on a daily basis."

Many times the people who write bad checks think they will be able to make them good later, Massengale said.

"In bad economic times people are going to feed their families and they'll bounce a check to do that," Massengale said.

In Georgia, a person commits the offense of deposit account fraud when he or she presents a check in exchange for payment of money, knowing it will not be honored. In some cases, the person writes the check on his or her own account and intends that the check will be honored. Other times, the incident involves forging someone else's name to a counterfeit check.

That's "the biggest headache" for the sheriff's office, Massengale said.

"You can find Mom and Pop who bounced a check at the corner grocery store, and most of those people answer the letter sent from the store," Massengale said. "With the ones doing it for profit, first you have to find out who they really are."

The fact that a majority of the bad checks written in Clayton County in 2003 were smaller, misdemeanor checks doesn't mean they were mistakes, Massengale said.

"People who are writing bad checks on purpose, they know the $500 limit, too," Massengale said.

If a person's check is returned for nonpayment, or "bounces," that person's rights are protected under Georgia law. Notice of the refusal to pay must be given the writer of the check by registered or certified mail.

The writer has 10 days from the receipt of the notice in which to pay the check plus applicable charges. Georgia law allows no more than $30 or 5 percent of the face of the check, whichever is greater, as a service charge.

When the check remains unpaid under the terms of the law, the writer can be prosecuted. According to the Georgia code, the punishment for a misdemeanor case of deposit account fraud is a maximum fine of $500 or 12 months in jail or both.

The penalties for a felony case include a fine of up to $5,000 and a maximum time of imprisonment between three and five years, depending on whether or not the check was from an out of state check.

But other times, checks are written by criminals who have every intention of defrauding someone. Deposit account fraud then often becomes forgery.

One defense banks take against accepting forged checks is a signature card provided by customers when they open a new account, said Kim Devine, manager of the Heritage Bank in Jonesboro.

"We take that and make sure it matches the signature on the check," Devine said.

Also, the bank doesn't accept checks that have been changed in some way because they often turn out to be bad. And the companies that make checks have some security measures of their own, Devine said.

"They make them out of a special paper so when people try to use ink remover (to "wash" the information off a check and replace it with the thief's name) it blots it and they can't use it," Devine said.

Bonnie Bray, branch manager of Park Avenue Bank in McDonough, said bank officials take every precaution to protect their customers. However, customers need to be aware of how easy financial information can get into the wrong hands.

"Customers need to shred financial papers instead of just throwing them away," she said. "You don't know who is going to go through your trash. Also be very suspicious of telephone and Internet scams that ask you to verify Social Security or bank account information. A lot of people fall for these."

The FTC states 21 percent of identity theft crimes reported by Georgians in 2003 involved bank fraud involving checking and savings accounts and electronic fund transfers.

But the Internet can help bank customers by providing a way for them to check on their accounts daily rather than waiting for a monthly statement.

"Internet banking is a good tool to check your balance daily," said Bray. "You can visually see what's posted to your account every day. For customers not comfortable with the Internet, most banks have automated phone systems that provide the same information."

The easiest way for thieves to steal account information is by literally looking for a red flag.

"People should not write checks for bills and leave them in their mailbox to be picked up," Bray said. "That gives crooks access to their account number, bank routing number and their signature. All they have to do is pick up that bill, ?wash' the check, keep your signature and make the check out to them."

Merchants usually take the hit of counterfeit checks. Bray also said bank tellers take precautions and look for telltale signs of fraud when a check is presented over the counter.

"We look for so many factors. We're looking for perforated edges, checks in range, making sure everything is in sync," she said. "The date of birth is the biggest thing crooks miss."

Devine said that many thieves also use the wrong routing number for the state in which they are trying to pass the forged check.

"That's a big red flag," Devine said.

Clever crooks try calling banks to verify funds, a traditional method used by merchants for the same purpose. However, Bray said some banks have stopped verifying funds for that very reason.

In neighboring Henry County, a county with half the population as Clayton there has also been a jump in bad checks, going from 299 arrests between July and December 2002 to 332 arrests during the same time period in 2003.

When checks bounce out of carelessness, Henry County Sheriff's Maj. Keith McBrayer said the ball is hard to stop rolling.

"We'll send out a letter telling people a warrant is being taken out for their arrest for bad checks," he said. "They get that letter and get into a panic. They think they can come in and pay the check and the service charge but by that time, it is too late. They have to be arrested."