Association urges regulators to address problem of fraudulently altered checks

NYCUA with tagline

The New York Credit Union Association is urging federal and state regulators to take action to address the growing issue of fraudulently altered checks.

In a letter from William J. Mellin, Association president/CEO, this week to the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, FDIC and the New York State Department of Financial Services, Mellin urged the regulators to  initiate joint supervisory guidance to ensure that fraudulent check warranty claims are resolved “promptly and reasonably.”

“While the NYCUA is sensitive to the regulators’ general position that it is not your responsibility to get in the middle of arguments between financial institutions that you regulate, we are not asking for such intervention,” Mellin stated. “We are encouraging regulators to explore policymaking to establish specific timeframes for the depository financial institutions to confirm receipt of these warranty reimbursement claims, and to bring them to closure within a reasonable time period.”

Credit union members have reported a significant rise in fraudulently altered checks being drawn on their members’ accounts, and the problem has been recognized by credit union regulators, the United States Postal Service and law enforcement, as previously reported in the New York Minute.

In sum, in these scenarios, a credit union member places a check in the custody of the USPS for delivery to a recipient. This check is then intercepted by a criminal, who alters the payee and dollar amount on the check; and deposits it into another account. These accounts are typically fraudulently established and emptied quickly; and it becomes difficult to trace the perpetrator or retrieve the funds.

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