I recently settled a case that would shock most business owners regarding mail-in cheques that prompted me to write this article to hopefully protect our readers. 

 

How many of you think it is safe to pay a bill by mailing a cheque to a business? Many people don’t know that there is a vulnerability in the market that the Banks will not tell you about, and you could be on the hook for thousands of dollars if you are the victim of fraud.

 

Cheque security has not kept pace with modern technology, and the old way of writing a cheque might pose a very serious risk to you. I will share with you an example of what can happen if you handwrite cheques and mail them. 

 

Bad people are looking for opportunities to steal mail with a company or personal cheque contained within. They open the mail and use Photoshop to create a near-exact copy of the cheque and leave the amount blank. They then copy the signature, the font, account numbers and can print them with a high-quality colour printer written in the name of another company for a much larger amount. Sometimes they re-create the cheque payable to the same company but for a higher amount, and they open up an account at a small branch in a small town in the company’s name with false documents and then cash the cheque at that branch.

 

In this particular circumstance, I had a client come to me beside themselves about being screwed around by a major bank. This client was a successful and well-established businessman that had used the said bank for decades. The businessman wrote a small cheque to a supplier for around $200 and mailed it to the  company. The small business’ accounting department followed up a month later when the supplier said they didn’t receive the cheque, and another one was sent.

 

What this company missed was that a cheque for a very large amount came out of their account a week after they mailed the cheque. Because the company does a lot of business, the accounting department missed the unusual activity, thinking it was a withdrawal from a major account.

 

A couple of months later they received a call from a bank manager in northern Ontario saying they found a series of cheques cashed at their branch that were suspicious and he advised them to cheque into this large cheque they cashed and said they should call their bank to see what is going on.

 

Well, their local branch manager was very responsive, he said someone wrote a fraudulent cheque, and the money came out of the business account. He immediately refunded them the $30,0000 +.

 

You would think the issue would have been over at that, but a month later a senior member of the bank called from Toronto to say it was a mistake to reimburse them the money and so they took the $30,000 back out and said tough luck.

 

We were shocked too! The bank’s justification was that in the fine print in your banking contract, it says that you have 30 days to review your transactions and identify problems. After 30 days if you do not raise an issue, even if you were defrauded, the bank takes the position, it is no longer their issue. In this case, even though someone stole this company’s cheque and fabricated a false one for 30 grand and cashed it under false pretenses… the bank said tough luck.

 

Now the way we fought this position and made the bank reconsider was to emphasize that the fine print doesn’t say you should review your transactions monthly because the cheques the bank makes you think are secure are really not and can be easily copied and cashed at other banks.  

 

If they told us that I am sure we would be paying more attention.

 

Thankfully we were able to put up a big stink and convince the bank to return the money (after we escalated the matter to the highest decision-makers in Canada) at the threat of a public lawsuit.

 

The reason why we are sharing this story is to let you know that your cheques are not as secure as you think, and you should keep in mind the following issues tp protect yourself financially.

 

  1. Whenever you can, use e-transfers, they are more secure and prevent fraud.
  2. You are responsible for reviewing your monthly statements for accuracy and letting the bank know if there are any irregularities. If you don’t, the bank will try to make you responsible for their own poor security measures.
  3. If you have to use a paper cheque, make a deliberate effort to follow up on it as paper cheques are a higher risk for fraud, and you do not want to have to hire a lawyer to fix the issue after the fact.

 

All of these contracts with their fine print are there to protect the institution, not you. It is very hard to read or even understand the fine print on contracts these days, so do what you can to protect yourselves.

 

If you ever feel there is something financially fishy going on, or if a friend or family member approaches you with an offer to good to be true, please reach out to us and we will help protect you from fraud. London and the surrounding region has one of the highest rates of white-collar fraud, and we have experience prosecuting these crimes in the past and can readily identify threats or frauds. Especially be on the lookout for Ponzi schemes promising high returns for no risk.

 

Keep it Classy!

 

Contact Millars Law When You Can’t Afford to Lose (519) 657-1LAW or info@millarslaw.com


By: Phillip Millar