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Forged cheque scam hits UK retailers

Funds clear, and then...

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UK computer retailers are warned today of a sophisticated new scam involving counterfeit cheques.

The fraud involves British cheques that are very good forgeries - not least because they use a cheque number sequence that is both valid and as yet unused.

Online fraud prevention scheme Early Warning believes that these cheques may be accepted and processed by the banks if they came to be presented.

The scam is only then spotted when the company whose cheque-book has been copied notices a fraudulent withdrawal. The banks then reclaim the funds from the scammed retailer, by which time the goods might already have been shipped out through freight forwarder firms used by the fraudsters as delivery addresses.

Early Warning has been told of two such scams targeting its members to date - the first involving £4,000 and the second £12,000.

One of the targeted companies was StinkyInk.com, an online printer consumables store, which narrowly avoided been caught out by the scam.

John Sollars, managing director at StinkyInk.com, said: "We received a cheque in the post to cover a quote we'd sent out via email. It all looked a little suspicious, so we checked on the company issuing the cheque and they were a reputable UK firm established for forty years. It was only when we started to investigate things further, both through the bank and through our own research, that we realised it was definitely a scam."

Andrew Goodwill, managing director at Early Warning, said: "The fraudsters are finding increasingly sophisticated methods for continuing their scams. This particular example looks to involve people with a good understanding of British banking and cheque printing."

Retailers are urged to be cautious of high value cheque orders from new clients, particularly when freight-forwarding firms are used as delivery addresses. In such cases, retailers should double cheque the validity of orders both with the company on whose name a suspicious account is drawn and their banks.

How the Fraud Works

The targeted online retailer receives an email message, which commonly asks for the delivery of high-value computer equipment to be made through freight forwarding companies.

Once the retailer has replied with a quote via email, they then receive in the post a British cheque from an established British company. The retailer presents the cheque to the bank, the funds clear and the goods are shipped out accordingly to a freight company.

The scam is only then spotted when the withdrawal is noticed by the company whose cheque book has been forged. The banks will reclaim the funds from the retailer, but the goods have long since gone.

The counterfeit cheques appear to be extremely good forgeries and use valid and unused cheque number sequences. ®

External Links

The Early Warning Web site acts as a repository for known credit card frauds, as well as other scams involving counterfeit cheques and letterheads. It also features an email based Fraud Alert service.
Card Watch: information on payment card fraud and its prevention.

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