Fraud Prevention and Security Flashcards

A customer deposits a check, then quickly withdraws the funds before the check clears, while covering it with a check drawn on another account with insufficient funds. What is this scheme called?

Answer: Check kiting

Check kiting exploits the float time between banks to create artificial balances using worthless checks.

Which sign most strongly suggests a check has been chemically washed?

Answer: Faded ink, discoloration, or a rough texture in the payee and amount areas

Washing uses chemicals to erase ink, often leaving discoloration or altered paper texture where fields were rewritten.

The routing number printed in the MICR line at the bottom of a U.S. check contains how many digits?

Answer: 9

ABA routing numbers are nine digits, the last being a check digit used for validation.

A new customer's first deposit is a large official check from an online buyer who 'overpaid' and wants the difference wired back. What should the teller suspect?

Answer: An overpayment scam using a counterfeit official check

Overpayment scams use fake cashier's checks and pressure victims to send back the 'excess' before the check is returned.

Which feature on a check is designed to show the word 'VOID' when the item is photocopied?

Answer: Void pantograph

A void pantograph is a hidden pattern that becomes visible on copies to reveal duplication.

A business customer uses a service that matches presented checks against a list of checks it actually issued. What is this fraud-prevention service called?

Answer: Positive pay

Positive pay compares presented checks to the issuer's list and flags mismatches for review.

A customer presents a check where the written (legal) amount differs from the numeric (courtesy) amount. Under the UCC, which amount generally controls?

Answer: The written amount

Under UCC 3-114, words prevail over numbers when they conflict.