Congress Probes Remote Check Scam

WASHINGTON — Lawmakers have begun an investigation into a new online scam with which banks and credit unions are being asked to process and accept unsigned checks created by criminals. In letters to NCUA and the federal banking agencies, two leading Congressmen are asking whether this emerging fraud is being monitored for 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, ask 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? and should be address by the Federal Reserve, according to a copy of the letter obtained by The Credit Union Journal.