Training Presentation

1. Training Presentation Check Fraud and Are you smarter than a “Check Frauder?”

2. Introduction The overall purpose of today’s training is to increase your awareness of check fraud. • How to spot potential check fraud schemes • How your actions are key to our financial success

3. Today’s Agenda • Types of Check Fraud • Review how they do it • How to examine Checks • Know your member • Test your knowledge by playing a game: “Are you smarter than a Check Frauder?”

4. How they try to out smart us • Forgery - or stolen • Altering check information • Counterfeit Checks • New account fraud

5. Forgery • Stolen blank checks • Stolen issued checks

6. Alteration of checks • Altering the face of the check • The amount • The Payee • The Endorsement

7. Counterfeit Checks • False identification • False checks drawn on valid accounts

8. Account Fraud - New and Closed • False identification • Name • Address • Create fraud in new SFCU account • Obtain checks to defraud another financial institution • Fraud on closed, dormant or inactive accounts

9. Some tell-tale signs of counterfeit checks • Lack of business information • No Perforated edge • MICR Encoding • Location, location, location • Mistakes

10. Numbers in the MICR Line Federal Reserve District Number (22) within Routing and Transit number CU ID # and the Members Account # Check Digit and draft’s number Space left blank- to be filled in by clearing house.

11. Federal Reserve Banks Federal Reserve Districts Location Banks CU & Thrifts Boston 01 21 New York 02 22 Philadelphia 03 23 Cleveland 04 24 Richmond 05 25 Atlanta 06 26 Chicago 07 27 St. Louis 08 28 Minneapolis 09 29 Kansas City 10 30 Dallas 11 31 San Francisco 12 32

12. Elements of Negotiability • In writing • Signed by the Maker (Drawer) • An Unconditional Promise or Order to Pay • A certain exact amount • A Date • Drawee- name, address and routing/ transit number • Contain the words of Negotiability which are • “Pay to the order of” • “Pay to the Bearer”

13. Time will Tell 14100/22148 Mary Member 123 Main St December 12, 2007 100.00 Pay to the order of SFCU Medford, NY Mary Member :[221481181:]114100 000000

14. Check Endorsements • Should agree • letter for letter with the payee line on the front. • Most common endorsements • Restrictive endorsement • Special Endorsements

15. Know your member • Positively identify your member when cashing checks • Also note body language and attitude • Heed alerts/ stops/ and warnings • Place proper holds • Be mindful of new accounts and exception hold reasons

16. YOU can help! Help prevent loss. • Review signatures • With Member: Compare member’s signatures on back of check with the one we have on record. Ask for additional ID’s if needed. • Non-Member with on-us Check: Compare non-member’s signature on back of check with his ID’s • Sign again and compare • Review ID’s • Use counterfeit document scanner • Look for alterations • Review dates and personal identification information

17. Summary • Check fraud can come in many forms • Listen to that little voice • Use the tools we give you • Do you think you are “Smarter than a ‘Check Frauder’”?

18. Are you ready to see if you are Smarter than a Check Frauder? Let’s test your knowledge with the follow two examples

19. John Johnson wants to cash this “On-Us” Check First check to review

20. Second example This new account was opened on Nov 19th. It is now Dec 20th and member wants to do a split deposit. She would like $400.00 deposited and the $2,000.00 back in cash. What does your inner voice say? What questions will you ask yourself?