Cheque FraudProtecting Yourself

By: Ryan Kagan, CPA, CA

Embrace the Cloud - Join the Evolution

Cheque Fraud - what does it mean?

Google refers to Cheque Fraud as a category of criminal acts that involve making the unlawful use of cheques in order to illegally acquire or borrow funds that do not exist within the account balance or account-holder's legal ownership.

Cheque Fraud - Types of Fraud? Counterfeiting Cheques - Fraudsters have become proficient in producing web sites, email, goods and fraudulent cheques that have the same look and feel as the real item.

Overpayment scams - A "seller" receives a counterfeit cheque from a "purchaser" in excess of the amount owed; the "seller" is asked to deposit the cheque and wire the excess funds back; the deposited cheque is subsequently returned as counterfeit and charged back to the "seller's" account.

Money Mules - A money mule is a term used to describe an individual who is recruited by scammers to serve as an intermediary to transfer stolen funds. The mule may or may not be aware that they are being used.

Romance Scams - Any individual with false romantic intentions towards a victim gaines their affection and trust (sometimes with the promise of marriage) and access to the victim's money, bank account, credit cards or in some cases by getting the victims (usually unknowingly) to commit fraud on their behalf.

Cheque Fraud - An actual experience? First point of Contact was made through social media. They contacted me as I am an accountant and commonly help overseas companies pay withholding taxes to the CRA and transfer the remaining funds to a foreign entity.

They were looking for a company to manage their collections and withholding tax requirements. A desirable contract for a CPA and a lawyer.

I was amazed they had a valid CRA account number with a Valid company attached that tied into the company email, they provided a contract which would be normal in due course of business. They created a valid

What was suspicious is they did not have a web presence and all documents had ‘shady’ electronic signatures.

Cheque Fraud - An actual experience? I accepted the engagement thinking it was legitimate. They provided contact details for me to contact one of their client. All seemed ok, they even played out the actions of a regular collection contract, with supporting commercial invoices, that had valid customs information.

The first cheque arrives, and there is a typo on the cheque, it is not made out to In trust as agreed on the contract, just to my name. At the same time an odd sensation of a rush to deposit and transfer funds occurred.

Luckily I called the company listed on the cheque to notify them of the typo, and found out the cheque was fraudulent. I also found out the cheque was made out for the exact amount of financing they just received on that day.

Things that stood out in my mind was the numbers they called me from where private, and the email did not correspond to the customer.

Cheque Fraud - What happens if I didn’t Call?Firstly, the company that has the funds taken from their account, they would have been in violation of an equipment purchase agreement, leaving them liable to lawsuit, and worst of all taking away the equipment they purchased that was required in order to make the loan payments they committed to.

Does the bank have leniency due to the fraud, this is not always the case. Since the fraud is in the bank’s mind unrelated to the loan, payments are still required.

The timeline is 6 to 8 months to have your funds returned.

What does this mean for the company? Bankruptcy; 30 jobs destroyed; 30 families devastated.

I guess they were Lucky I noticed the typo.

Which Countries are going Chequeless?● United Kingdom● Australia● New Zealand● United States● Canada● Most Latin American countries

Why the Move to a Chequeless Society Should be Embraced by All

Who is being targeted?● Anyone using cheques that they send out in the mail.● Anyone using social media to help build their business.● Anyone applying for financing.● Anyone with excess funds available in their chequing account.

SCARED???

How to get protected!1. Plooto! Yes, It’s that easy - not using cheques is your best defence, if your cheques aren’t in the system

you are no longer a target.2. Switching your account monitoring to a cloud based solution. Being in the cloud gives you instant and

easy access to cheque your accounts - as daily monitoring of your accounts is a key critical success factor in defending against negative impacts on fraud.

3. Getting your bookkeeping in the cloud in the hands of the right professional, this can serve a second line of defense which can back .

4. Ensure your balances are limited to the funds you really need.

What can you do? Recognize, Report and Stop it!Canadian Anti-Fraud Centre

Toll-free: 1-888-495-8501

RCMP Secure Sign-In

Local: 1-613-993-2999 (Ottawa)

Competition Bureau of Canada

Toll-free: 1-800-348-5358

Ontario Provincial Police

Toll-free: 1-888-310-1122

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