December 24, 2007
Fraud squad | Mechanic Savings Bank's Lisa St. Hilaire-Crites on efforts to protect banks — and their customers — from scammers
By Sara Donnelly
When Lisa St. Hilaire-Crites took over three years ago as the security officer for Mechanics Savings Bank in Auburn, overseeing not only the main branch but also branches in Lewiston and Windham, she describes being overwhelmed by the number of customers who tried to deposit fraudulent checks mailed to them from scammers.
Since then, Crites says the racket hasn't changed ˆ scammers target strangers, often the elderly or disabled, convince them they've won an out-of-state lottery and send them a check to deposit, asking them to wire hundreds or thousands of dollars to pay what they say are taxes on the outstanding winnings. The customer deposits the check, wires the money and the fake check then bounces.
Crites, who also doubles as the bank's assistant vice president, also has seen people wire money to online friends who then disappear. And she's seen the same customers targeted over and over. According to Federal Trade Commission statistics, Maine ranks 15th in the nation for the number of fraud complaints reported to authorities last year ˆ 1,791 Maine consumers were scammed or almost scammed by gimmicks like shop-at-home schemes and fake sweepstakes in 2006. The average consumer loss: $1,000.
To fight the fraud, Crites developed a training program to teach tellers to flag a scam and then ˆ this is where it gets tricky ˆ to question customers about the origin of the check and try to intervene.
Her quest at Mechanics to keep her customers fraud-free ˆ and the bank free of the financial hit caused by a defaulting customer ˆ prompted the Maine Association of Community Banks to mirror her efforts in a statewide campaign of posters and brochures warning banks and their customers of fraud called "Stop, Look, and Listen," which the association will launch this spring.
Mainebiz spoke recently with Crites, the chair of MACB's security committee and an organizer of the campaign, about the trouble she's seen. The following is an edited transcript.
Mainebiz: What's the most common fraud scheme you see at Mechanics these days?
Lisa St. Hilaire-Crites: In recent months, I've seen a lot of the lottery letters, and what it is is you get a letter in the mail telling you that you've won a lottery ˆ I've got a bunch of them here with me.
A bunch of counterfeit checks people tried to cash?
Oh yeah, I've got a whole file full. We've had them come into the bank and checked them for customers and told them they were not real. We've stopped them. Mostly what they do is the letters come in and they say that you have won a lottery. This one, for instance, it says, "Notice of claims of winning. You are one of the seven category winners of the contest held on Dec. 18. This entitles to you a lump sum of $250,000 to be paid by certified check. Enclosed is a check for $4,750, which is deducted from your winnings. You will be using some of this money to pay for taxes on your base winnings, a tax amount of $3,750 to be paid through MoneyGram or Western Union." Specific, very specific. So what they do is the customer comes in, deposits the check, keeps the $1,000, because they think, "That's cool, I got a thousand bucks," wires out the $3,750 within the same day, and that cash is gone, that's cash in the pocket of whoever sent this letter. And the check will come back as counterfeit and the customer owes us the full amount of $3,750. And by then they've already spent the $1,000.
How common are these lottery scams?
[Over the last] probably four months, they've been the most common. Prior to that I had a spell of what I call "love connections" [involving] being on the Internet chatting. And they work hard at this ˆ they'll go for a month, two months, however long it takes for the person that they're chatting with to become very comfortable with them and trust them and even fall in love.
It's really what happened to the three that I dealt with. I dealt with three within a two week period. Three men, they had all received checks from a woman that they had been chatting with, I think two out of the three knew that they were from Nigeria. The girls all said ˆ well, we think they're girls, one of them actually had a [phone] conversation with a female, but you don't know who you're chatting with [because] these are online chats. And one of them said, "I want to come meet you but I can't get U.S. currency here. I'm going to mail you these money orders, could you please cash them and wire them back to me?" Which doesn't make sense, but at that point they've trusted them and they do it. I had three within a two week period; two got scammed, one we stopped at the window.
You estimate customers at Mechanics Savings Bank try to deposit between two and 10 fraudulent checks every month. You've personally dealt with several customers who have lost thousands of dollars apiece, which they alone are liable for. The argument could be made that customers are responsible for the financial decisions they make, not the bank. So why should banks train staff to intervene?
The banks should care because we should protect our community and our customers from being financially exploited. It means that we care about our customers and we don't want them to suffer these losses. Whether or not we get our money back, it doesn't matter. The law says that the person cashing the check is responsible for it. However, we want to stop it prior to that so there is no financial loss to the customer because we are a small community bank. We pride ourselves on knowing our customers and we want to protect them.
And also, I assume, because the bank can lose money on scams victims can't or don't pay back? Has Mechanics lost money on scams?
On scams like this, we definitely have had losses in the thousands of dollars.
Is this part of your motivation to warn other banks and their customers with the Stop, Look and Listen campaign?
Sure. It's to prevent losses not only for the bank, but with this program itself. My specific thoughts on it were to help the customers because of the stories. I sit with these people and, you know, one elderly man and his wife, she cried the whole time she was there because they had no money and he just kept answering the phone and thinking he was going to win big someday. We finally stopped him from just answering the phone. They target you. They know.
How much did that couple lose and did the bank do anything to help?
They lost $4,900. And since then he's been in and brought in stuff he's received to show me. And I keep it all.
You admit counterfeit checks have become so advanced that it's almost impossible to tell what's real and what's fake. How do you teach your tellers to identify fraudulent checks?
One of the things we tell them to look for as far as the checks themselves go, first of all, if it's a cashier's check and it's [from] out of state, they have to look closely. If the edges are all smooth ˆ most of the time you'll have one edge that has the ridges on it from where it was torn, if it's real ˆ the smooth edges might indicate counterfeit.
A lot of times, when the check is not perfect, the frame around the edge of it will be a little bit crooked and that could indicate in the printing that it's a counterfeit check. A real cashier's check should never be crooked in any way. The check itself ˆ does it state that there are security features on it and then you can't find them? Most real checks have little fibers in the paper. We have little black lights that we put the checks under, all of our branches have that.
Those things are just red flags for them to say, "Maybe I should look into this further." And at that point, the teller can go online, find the bank, find the phone number ˆ very easily nowadays you can do that ˆ and they can call the bank.
What else can tellers do to stop fraud at the window?
The other thing would be questioning the customer, and that's the biggest thing that we've had. It's hard for our front line to feel comfortable ˆ they don't want to pry into people's lives, and there's privacy issues too ˆ but we explain to our customers when we have any questions, our line is to say, "Sir or Madam, we've had a lot of counterfeit checks that have passed through this state. Do you mind us asking you where you got the check from?" Or, "Do you know the person you got the check from?" However they want to word it.
What can tellers do if a customer gets angry that they're being asked questions about the deposit?
If a customer gets upset and the front-line person is not comfortable with the check, any bank is under no obligation to cash a check they are not comfortable with. And we do not have to cash or deposit any check that we think something could be wrong with. There are very few times that the customer gets upset. We have had a couple of instances where they have grabbed the check and taken off with it, and at that point we send out an alert within our bank in case they go to another branch. That second teller might not be as savvy as the first one. But that doesn't happen very often. Mostly they're very understanding and thankful that we're trying to save [them money] after we explain to them that it's their responsibility, not ours.
What do you hope the Stop, Look, and Listen campaign will accomplish?
I'd like to see all the banks find out what we're doing and focus on stopping the problem before it happens. Because I know a lot of the banks are going through law enforcement and so forth to get their money back on these things. It's a difficult process to go through, especially when the customer is an innocent bystander. For me, I hope that other banks will go more with training their front end and their customers, [and] leave notices out so that their customers understand if it is too good to be true, it is. And they should think twice about what they're receiving and what they're trying to deposit and cash.
Is there any one experience you had that made you decide to create this training?
I would say it was the deaf person. That was in summer or fall of 2006. One of our deaf customers had been scammed. He kind of fell for a woman on the Internet and she sent him a check saying something to do with she needed help and could he cash it for her because she couldn't cash it, and wire the money back out. And he did and it was a counterfeit. And when I sat with him in my office to talk about, he speaks a little bit and he can read lips well, and I said, "Explain to me what happened." And he started to cry and said, "I really thought she cared for me. I can't believe this happened." And that really ˆ talk about taking advantage of people ˆ that really hit me hard. He lost upwards of $8,000.
Since then, Crites says the racket hasn't changed ˆ scammers target strangers, often the elderly or disabled, convince them they've won an out-of-state lottery and send them a check to deposit, asking them to wire hundreds or thousands of dollars to pay what they say are taxes on the outstanding winnings. The customer deposits the check, wires the money and the fake check then bounces.
Crites, who also doubles as the bank's assistant vice president, also has seen people wire money to online friends who then disappear. And she's seen the same customers targeted over and over. According to Federal Trade Commission statistics, Maine ranks 15th in the nation for the number of fraud complaints reported to authorities last year ˆ 1,791 Maine consumers were scammed or almost scammed by gimmicks like shop-at-home schemes and fake sweepstakes in 2006. The average consumer loss: $1,000.
To fight the fraud, Crites developed a training program to teach tellers to flag a scam and then ˆ this is where it gets tricky ˆ to question customers about the origin of the check and try to intervene.
Her quest at Mechanics to keep her customers fraud-free ˆ and the bank free of the financial hit caused by a defaulting customer ˆ prompted the Maine Association of Community Banks to mirror her efforts in a statewide campaign of posters and brochures warning banks and their customers of fraud called "Stop, Look, and Listen," which the association will launch this spring.
Mainebiz spoke recently with Crites, the chair of MACB's security committee and an organizer of the campaign, about the trouble she's seen. The following is an edited transcript.
Mainebiz: What's the most common fraud scheme you see at Mechanics these days?
Lisa St. Hilaire-Crites: In recent months, I've seen a lot of the lottery letters, and what it is is you get a letter in the mail telling you that you've won a lottery ˆ I've got a bunch of them here with me.
A bunch of counterfeit checks people tried to cash?
Oh yeah, I've got a whole file full. We've had them come into the bank and checked them for customers and told them they were not real. We've stopped them. Mostly what they do is the letters come in and they say that you have won a lottery. This one, for instance, it says, "Notice of claims of winning. You are one of the seven category winners of the contest held on Dec. 18. This entitles to you a lump sum of $250,000 to be paid by certified check. Enclosed is a check for $4,750, which is deducted from your winnings. You will be using some of this money to pay for taxes on your base winnings, a tax amount of $3,750 to be paid through MoneyGram or Western Union." Specific, very specific. So what they do is the customer comes in, deposits the check, keeps the $1,000, because they think, "That's cool, I got a thousand bucks," wires out the $3,750 within the same day, and that cash is gone, that's cash in the pocket of whoever sent this letter. And the check will come back as counterfeit and the customer owes us the full amount of $3,750. And by then they've already spent the $1,000.
How common are these lottery scams?
[Over the last] probably four months, they've been the most common. Prior to that I had a spell of what I call "love connections" [involving] being on the Internet chatting. And they work hard at this ˆ they'll go for a month, two months, however long it takes for the person that they're chatting with to become very comfortable with them and trust them and even fall in love.
It's really what happened to the three that I dealt with. I dealt with three within a two week period. Three men, they had all received checks from a woman that they had been chatting with, I think two out of the three knew that they were from Nigeria. The girls all said ˆ well, we think they're girls, one of them actually had a [phone] conversation with a female, but you don't know who you're chatting with [because] these are online chats. And one of them said, "I want to come meet you but I can't get U.S. currency here. I'm going to mail you these money orders, could you please cash them and wire them back to me?" Which doesn't make sense, but at that point they've trusted them and they do it. I had three within a two week period; two got scammed, one we stopped at the window.
You estimate customers at Mechanics Savings Bank try to deposit between two and 10 fraudulent checks every month. You've personally dealt with several customers who have lost thousands of dollars apiece, which they alone are liable for. The argument could be made that customers are responsible for the financial decisions they make, not the bank. So why should banks train staff to intervene?
The banks should care because we should protect our community and our customers from being financially exploited. It means that we care about our customers and we don't want them to suffer these losses. Whether or not we get our money back, it doesn't matter. The law says that the person cashing the check is responsible for it. However, we want to stop it prior to that so there is no financial loss to the customer because we are a small community bank. We pride ourselves on knowing our customers and we want to protect them.
And also, I assume, because the bank can lose money on scams victims can't or don't pay back? Has Mechanics lost money on scams?
On scams like this, we definitely have had losses in the thousands of dollars.
Is this part of your motivation to warn other banks and their customers with the Stop, Look and Listen campaign?
Sure. It's to prevent losses not only for the bank, but with this program itself. My specific thoughts on it were to help the customers because of the stories. I sit with these people and, you know, one elderly man and his wife, she cried the whole time she was there because they had no money and he just kept answering the phone and thinking he was going to win big someday. We finally stopped him from just answering the phone. They target you. They know.
How much did that couple lose and did the bank do anything to help?
They lost $4,900. And since then he's been in and brought in stuff he's received to show me. And I keep it all.
You admit counterfeit checks have become so advanced that it's almost impossible to tell what's real and what's fake. How do you teach your tellers to identify fraudulent checks?
One of the things we tell them to look for as far as the checks themselves go, first of all, if it's a cashier's check and it's [from] out of state, they have to look closely. If the edges are all smooth ˆ most of the time you'll have one edge that has the ridges on it from where it was torn, if it's real ˆ the smooth edges might indicate counterfeit.
A lot of times, when the check is not perfect, the frame around the edge of it will be a little bit crooked and that could indicate in the printing that it's a counterfeit check. A real cashier's check should never be crooked in any way. The check itself ˆ does it state that there are security features on it and then you can't find them? Most real checks have little fibers in the paper. We have little black lights that we put the checks under, all of our branches have that.
Those things are just red flags for them to say, "Maybe I should look into this further." And at that point, the teller can go online, find the bank, find the phone number ˆ very easily nowadays you can do that ˆ and they can call the bank.
What else can tellers do to stop fraud at the window?
The other thing would be questioning the customer, and that's the biggest thing that we've had. It's hard for our front line to feel comfortable ˆ they don't want to pry into people's lives, and there's privacy issues too ˆ but we explain to our customers when we have any questions, our line is to say, "Sir or Madam, we've had a lot of counterfeit checks that have passed through this state. Do you mind us asking you where you got the check from?" Or, "Do you know the person you got the check from?" However they want to word it.
What can tellers do if a customer gets angry that they're being asked questions about the deposit?
If a customer gets upset and the front-line person is not comfortable with the check, any bank is under no obligation to cash a check they are not comfortable with. And we do not have to cash or deposit any check that we think something could be wrong with. There are very few times that the customer gets upset. We have had a couple of instances where they have grabbed the check and taken off with it, and at that point we send out an alert within our bank in case they go to another branch. That second teller might not be as savvy as the first one. But that doesn't happen very often. Mostly they're very understanding and thankful that we're trying to save [them money] after we explain to them that it's their responsibility, not ours.
What do you hope the Stop, Look, and Listen campaign will accomplish?
I'd like to see all the banks find out what we're doing and focus on stopping the problem before it happens. Because I know a lot of the banks are going through law enforcement and so forth to get their money back on these things. It's a difficult process to go through, especially when the customer is an innocent bystander. For me, I hope that other banks will go more with training their front end and their customers, [and] leave notices out so that their customers understand if it is too good to be true, it is. And they should think twice about what they're receiving and what they're trying to deposit and cash.
Is there any one experience you had that made you decide to create this training?
I would say it was the deaf person. That was in summer or fall of 2006. One of our deaf customers had been scammed. He kind of fell for a woman on the Internet and she sent him a check saying something to do with she needed help and could he cash it for her because she couldn't cash it, and wire the money back out. And he did and it was a counterfeit. And when I sat with him in my office to talk about, he speaks a little bit and he can read lips well, and I said, "Explain to me what happened." And he started to cry and said, "I really thought she cared for me. I can't believe this happened." And that really ˆ talk about taking advantage of people ˆ that really hit me hard. He lost upwards of $8,000.
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