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What is Bank Fraud?

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  • Written By: Adam Hill
  • Edited By: Heather Bailey
  • Last Modified Date: 13 April 2014
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Bank fraud refers to the use of deliberate misrepresentation in order to fraudulently obtain money or other assets that are held by a bank or similar institution. It is distinct from simple bank robbery or theft, because the perpetrator usually commits the fraud in secret, hoping that it will not be noticed until he has had ample time to move on. It usually requires some sort of technical expertise as well. For reasons like this, bank fraud is one of the offenses referred to as white-collar crime.

In most areas of the world, all types of bank fraud are illegal. One of the more prominent types of fraud is known as identity theft, where one person uses another person's private identifying information to obtain money, usually in the form of loans or credit. Somewhat related to identity theft is identity fraud, where credit is obtained by the use of an entirely fictitious identity. While identity theft and similar crimes receive a great deal of publicity, they are far from the only crimes involving bank fraud.

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Fraud involving checks is quite common as well. Forging checks or signatures on them, as well as altering checks that have already been written are two ways in which check fraud is committed. In the case of the latter, it may be as simple as adding a few strokes of a pen to turn a check for $100 US Dollars (USD) into one for $1,000 USD. Another common type of fraud is check kiting. This is any kind of fraud that takes advantage of the fact that funds can be drawn on a deposited check before the money is actually removed from the check writer's account.

Check fraud has a history as long as that of checks themselves. Over the years, security features have been incorporated into many types of checks, especially payroll checks. These include unique watermarks, heat-sensitive ink, and extremely fine printed lettering that is not easily noticed or counterfeited. Technology has placed many barriers in the way of those who would perpetrate bank fraud, but not all fraud can be completely prevented.

One kind of bank fraud that is still hard to detect or stop in time is that which is committed by bank employees themselves. In many cases, these acts are only discovered by careful auditing of the bank's accounting records, months down the road, by which time it is too late to recover lost funds. A complete description of the many possible ways to commit bank fraud would be impossible, but suffice it to say that criminals have gone to great lengths and used remarkable creativity in finding new and different ways to steal and defraud.

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Discuss this Article

anon926473
Post 8

Why does my bank, the Bank of the Philippine Islands not acknowledge their fault when in fact, something was done by their employees? Where do I report a dishonest bank if our Central Bank is adamant in helping me? Where is justice and restitution? The checks were fabricated and do not belong to my check series.

anon266460
Post 7

A depositor withdrew the amount stated in his passbook. The teller later told the depositor after almost three hours, that the latter overpaid the amount withdrawn, alleging that the former committed an inadvertent and honest mistake. The depositor denied it and the bank filed a complaint for estafa. What is the remedy for the depositor, considering that he swore that he only received the amount stated in his passbook and the figures stated on his withdrawal slips?

anon173108
Post 6

i recently set up an automatic transfer from my savings account to my checking account for $7000, thinking the money would be there at the time of the transfer. Unfortunately it wasn't but the transfer happened anyway, showing no negative balance and making it appear as if the funds were available.

So not knowing any better, I spent the money. My bank called me to tell me they are closing my account. Not really upset about that since I'm getting ready to file bankruptcy anyway. However, can this be taken as a form of fraud?

anon162084
Post 5

it is a fraud if the bank opens more than one account for a customer and this customer only uses one account.

anon77393
Post 4

For the first question i think it is a form of fraud. It's a common misunderstanding when one opens up several bank accounts in your name and you know about it, yet you continuously used the money. I'd report it to your bank and clear up the mix up immediately.

For the second anonymous question. i think if it is in a form it isn't, because he gave you consent to sign it, so since he said that he is at fault.

If the divorce hasn't taken affect yet then you should be fine other than that i don't know.

anon51382
Post 3

someone opened several bank accounts under my name and i used some of the money. is this fraud?

anon46267
Post 2

If your husband gives you permission to sign a check to help clear up a lot of finances, .even though you are divorcing and you sign his name and cash it and pay all the bill, lights, food etc., is that considered fraud and to what extent?

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