Experts Fear Check 21 Could Lead to Mass Fraud
The recently signed legislation known as "check 21", designed to speed the check clearing process, has many experts worried about fraud and security issues.
Source: eWeek
I foresee many non tech savvy people falling for this one and taking it on the chin. -KFConverting paper checks to digital images has the unintended consequence of significantly reducing the bank's recourse to fraud. The image-processing procedure can result in the destruction of the original paper document, eliminating evidence of fraud, which could make it difficult to prosecute check-fraud crimes in the future. In addition, many banks plan to make digital check images available to their customers online. Since digital items lend themselves to rapid retrieval, transmittal, and storage, converting to digital images opens the door to large-scale fraud, should these images ever be accessed. If the wave of recent phishing attacks is any indication, such fraud is a real possibility. In the white paper, Eisen describes a check-fraud version of a phishing scam, attributed to gangs from Eastern Europe. The scam begins with a spoof e-mailing campaign intended to trick bank customers to disclose their user name and login passwords. Using the fraudulently-obtained user names and passwords, the fraudsters retrieve customers' monthly statements and check images. Then the fraudsters create high-quality counterfeit checks that are nearly identical in appearance, drawn for an amount that is appropriate for the account, and bearing a scanned signature.
Source: eWeek
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