WASHINGTON -
In letters to NCUA and the federal banking agencies, two leading congressmen are asking whether this emerging fraud is being monitored and whether the acceptance of remotely accepted checks is a safe and sound banking practice.
The probe comes as credit unions and banks are diving into new technology to take advantage of the Check 21 law, which made electronic check images legal tender.
In one remote check scheme, a criminal calls a consumer and announces the consumer has won a cash prize, then asks for the necessary information to deposit the prize in the consumer's account. The criminal then "deposits" the check in the "winner's" account, giving the criminal access to withdraw funds form the account.
The lawmakers, Barney Frank, chairman of the House Financial Services Committee, and Ed Markey, a senior member of the House Energy and Commerce Committee, asked the regulators whether online fraud such as this has been increasing or decreasing? Who pays for these type of losses? How widespread is the use of remotely created checks in the payments system
Frank and Markey noted in their letter that the attorneys general of 35 states urged the Fed to prohibit banks from accepting remotely created checks as a form of payment. "We are disturbed that the acceptance of remotely created checks is still permitted, in light of previous warnings" by the attorneys general and others, said the letters.
The asked the regulators to respond to their inquiry by July 2.
The letters were sent to the Fed, FDIC, Comptroller of the Currency, Office of Thrift Supervision and NCUA.
