New York Launches Anti-Fraud Program

Effort aims to protect consumers and financial institutions from fake check scams.

January 4, 2011

The New York State Consumer Protection Board (CPB) joined with the Credit Union Association of New York (CUANY), New York Bankers Association, Independent Bankers Association of New York, and Consumer Federation of America (CFA) to announce the start of a new, innovative program to protect consumers and financial institutions from fake check scams.

Under the program, participating banks and credit unions will hand out “Don’t Become a Target,” a brochure created by the CFA, to every consumer who deposits checks or money orders of $1,000 or more, or withdraws $1,000 or more.

Twenty-two banks and credit unions in New York have signed up to participate. “The key is to prevent consumers from being victimized by educating them about fake check scams at the very point where they may be at risk,” says Susan Grant, CFA’s director of consumer protection, who is coordinating the program.

In a fake check scam, the consumer receives a genuine-looking check or money order and is asked to deposit the check and then wire money somewhere in return.

For instance, the check may be described as an “advance” on millions that the consumer has won in a sweepstakes or lottery. The consumer is instructed to send money to pay the taxes and claim the rest of the prize.

In other popular scenarios, the consumer is recruited to work as a “mystery shopper” or to process payments for a company and is instructed to wire money somewhere as part of the job.

No matter the story, the check or money order is phony, and when it bounces, the victim owes the money to the financial institution where it was deposited or cashed. The average loss is $3,000 to $4,000.

“Fake check scams are a serious problem for consumers,” says William Mellin, president/CEO of CUANY. “Credit unions want to do all they can to educate their members. That’s why we’re excited to be a partner in this consumer education program.”

CFA is providing the brochure to participating banks and credit unions at no cost. It has two electronic versions on its website.

Participating credit unions include:

  • ACMG Federal Credit Union
  • Auburn Community Federal Credit Union
  • Brooklyn Cooperative Federal Credit Union
  • Dannemora Federal Credit Union
  • Finger Lakes Federal Credit Union
  • Fulton County Federal Credit Union
  • GP Community Federal Credit Union
  • Greater Niagara Federal Credit Union
  • Horizons Federal Credit Union
  • Nassau Financial Federal Credit Union
  • New York Times Employees Federal Credit Union
  • Niagara Regional Federal Credit Union
  • OPCS Federal Credit Union
  • School Systems Federal Credit Union
  • Sidney Federal Credit Union
  • SUMA Yonkers Federal Credit Union
  • Syracuse Cooperative Federal Credit Union
  • Town of Hempstead Employees Federal Credit Union
  • Ulster Federal Credit Union
  • Westar Federal Credit Union