Fighting Identity Theft at Your Bank

Identity theft continues to increase at alarming rates. Given legislation that requires banks to implement robust identity theft programs, it is increasingly important that your institution seize every opportunity to detect and prevent crimes that involve fraudulently using individual’s personal information for economic gain.

Consider one complex check-cashing ring involving widespread identity theft that was exposed in 2009. According to the U.S. Attorney’s Office, the fraud involved eight banks, 29 perpetrators and losses approaching $1 million. The criminals included several bank employees, as well as a car dealership employee and an insurance company employee. Here’s how the scheme operated:

  • A ringleader in Philadelphia recruited the employees, sometimes by initiating romantic relationships with them.
  • Each employee gathered names, dates of birth, addresses, Social Security numbers and bank account information about customers from their company’s records.
  • The information the employees compiled was then used to create fraudulent checks.
  • “Check runners,” typically drug addicts or homeless people, would then use the information to apply for driver’s licenses. The fake licenses were presented as ID to cash the fraudulent checks. To ensure that the runners did not disappear with the proceeds, they were accompanied to the banks by at least one of the gang’s members.
  • Runners were also provided with new clothing to wear to the banks and to apply for the driver’s licenses to ensure that their physical appearance did not raise suspicion.

Here are three elements of the fraud and the steps that your bank can take to prevent a similar fraud from taking place:

Crime Element Number 1: Bank employees gathered the victims’ information in order to create fraudulent checks. Then, they printed, saved or emailed the information and provided it to members of the gang.

Steps to Take: Monitor the number of accounts accessed by each of your employees. If a check fraud occurs, as a matter of routine, review which employees accessed the account. Find out what information they accessed such as biographical information and account activity. Also, if the employee under review is a frontline employee, consider matching his or her teller transactions to the date and time that he or she accessed the accounts experiencing check fraud. If the accounts were not accessed in the normal course of business, consider comparing the list of accounts accessed by the employee against all accounts that have experienced losses from check fraud.

Crime Element Number 2: Checks were cashed by runners or members of the check fraud ring.

Steps to Take: If a customer typically does not cash checks, ensure that tellers exercise appropriate caution. If possible, prompt tellers to ask for additional identification if check cashing is inconsistent with a customer’s previous account activity

Crime Element Number 3: Runners cashed checks using fake driver’s licenses. They were accompanied by a member of the gang who hung around while the transactions took place.

Steps to Take: Educate frontline tellers to be wary of customers that pull their driver’s licenses from a pocket. The vast majority of customers produce their ID from a wallet or billfold. Also, since the runners in this cash checking scheme received new clothing to avoid raising suspicion, tellers should be on the lookout for customers that appear to be wearing the same clothes as in their driver’s license picture. In addition, tellers and branch management should be aware of people loitering in the lobby. If individuals frequently visit the branch, yet do not approach the counter, it may be an indication that fraudulent activity is taking place.

Identity fraud typically involves a number of participants. By understanding each phase of the fraud, your bank can identify the participants and take steps to uncover the crimes before losses begin to mount.

For more information on how we can help your community bank, please contact Sonny MacArthur at or 404-420-5631.