A client recently wrote a $5,000 check to a charity.
It cleared.
And then the problems started.
Cleared doesn’t mean safe
She almost stopped there.
Cleared means done, right?
But she looked at the check image online.
Not just the amount. The actual picture of the check.
Someone had changed the payee. They changed the memo line too.
Her $5,000 never reached the charity.
The check cleared. It just didn’t go where she sent it.
She called her bank right away.
The check had been changed somewhere between her mailbox and the bank that cashed it.
The bank put a hold on the account. They said they’d move everything to a new account.
But the account was titled in their trust.
That meant the fix had to happen in person, at a branch.
My clients were traveling and not in the state where their trust was domiciled. They would have to work on this once they were back at home.
Now every autopay and direct deposit on that account is frozen. Bills are still due.
The bank said they’d investigate. They hoped to fix it soon.
Hope is no guarantee.
Big banks aren’t immune
This happened at one of the largest banks in the country. Not a small local bank. A brand name you know.
My clients have accounts at Charles Schwab. Another big name. I’d like to think that keeps them safe.
It doesn’t.
Fraud like this can happen anywhere a check travels through the mail. A big financial brand lowers some risks.
It doesn’t erase them.
So don’t panic. And don’t trust your bank less. Just pay closer attention.
I’ve been there
It’s easy to think this happens to other people. I thought that too.
Back in 2014, I opened the mail and found a letter from Best Buy.
They were congratulating me on my new credit card account.
An account I never opened.
More letters came over the next few days.
Each one was for an account I didn’t opened.
Thankfully, we didn’t lose any money.
But I lost hours upon hours cleaning it up.
Police reports. Phone calls. More phone calls.
That year, I froze our credit.
Mine and Elizabeth’s have stayed frozen ever since. That’s more than a decade now.
It hasn’t made either of us immune, just harder to target.
And it’s given me one less thing to worry about.
What you can actually do about it
There’s no way to guarantee you’ll never be targeted.
The people doing this are patient. They get better every day.
But there are steps you can take.
Most cost nothing. Together they take less an hour.
And they make you a much harder target.
Pull your credit reports. Go to AnnualCreditReport.com. By law, it’s the only site that gives you free reports from all three credit bureaus: Experian, Equifax, and TransUnion. No credit card. No subscription. No sales pitch. Just look over each report for any account or details you don’t recognize.
Turn on free alerts. This is a separate step. Go to each bureau’s own website and set up a free account. Turn on alerts for new credit checks and score changes. AnnualCreditReport.com won’t do this part for you.
Freeze your credit at all three bureaus. It’s free. It takes about ten minutes per bureau. You can temporarily lift the freeze in minutes any time you actually need to apply for credit. And it stops most new-account fraud before it starts.
Lock your Social Security number with the Social Security Administration. Here’s a good explainer on how and why. If you care for minor children or grandchildren, freeze their credit and lock their Social Security number too.
Mail fewer checks. Use direct deposit and online bill pay when you can. If you must mail a check, try to drop it at a post office box, not your own mailbox. If you have a trust account, ask your bank about Positive Pay. It’s typically a business tool, but some banks may offer it for trust or large accounts. And if you give to charity often, look into a donor-advised fund. That’s a giving account that sends money to charities for you, so you write fewer checks yourself.
Bottom line
None of this guarantees you won’t be a fraud victim.
But it’s free or low cost, doesn’t take much time, and makes you a harder target. That’s worth doing now, before you need it.
I’ve written about parts of this before, here and here. But it’s worth saying again, because most people still haven’t done it.
If you know someone this could help, forward it to them. A parent. An older relative. A friend.
This kind of fraud catches people off guard. A five-minute email might be what finally gets them to act.
Her check cleared. It just didn’t go where she meant it to. Don’t let that be you.
Hit reply and tell me: have you frozen your credit yet? If not, what’s stopped you?
Until next time,
— Russ
P.S. ~ Good news! Thankfully the funds are now back in my client’s bank account!
Russ, Thanks for sharing this information. Positive Pay does indeed have a cost and as a former user of Positive Pay, it is both time consuming and onerous. So, not a fan.
Excellent post. Definitely going to bookmark this for future reference. Very good information to have for now and the future.