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V O L . X X I X N O. X X V I I N OV E M B E R 2 7 , 2 0 2 3 20 B A N K I N G / F I N A N C E / I N S U R A N C E High-stakes crimes Fraudsters work alone and in groups, sometimes in a particular area before moving on. One type of crime involves depositing a fraudu- lent check into an account and spending money before the check clears. Another scam involves sending a fake cashier's check sometimes touted as a lottery prize; the scammer then asks the recipient to cash and wire back the funds to cover taxes and fees. A third category involves "money mules" — peo- ple who transfer money acquired illegally, whether in person, through a courier service, or electroni- cally, on others' behalf. While that may sound like the stuff of a Hollywood feature film — think "e Sting" or "Catch Me If You Can" — losing money to fraud is a real-life nightmare for many. Check "washing" is another common crime, since the chemicals used to remove ink on checks — nail polish remover, bleach, paint thinner — are cheap and widely available. Checks can also be deposited remotely and anonymously at ATMs or via mobile deposit — a convenience introduced after the 9/11 terrorist attacks that adds up to more headaches for Maine banks. "Back in the day, we used to meet in Lewiston and pass each other physical checks in a suitcase," Silsby recalls. at all changed after a law known as Check 21 took effect in October 2004, which cre- ated a new negotiable instrument called a substitute check. While the change paved the way for elec- tronic check processing and other modern conve- niences, it also did away with some of the security features that sit underneath paper checks. One newer rip-off tactic involves emailing a check endorsed with a generic signature with typed instructions "for mobile deposit only," then instruct- ing the recipient to take a picture of the check and deposit the fake payment. "Bank robbers come into the bank, but fraudsters try to get paid without coming into the bank," says Silsby, who has two full-time employees working fraud cases. As an added precaution, the bank trains branch staff to make eye contact with all incoming customers. Like Walmart greeters, they are there in part to deter crime — though not always with success. "Our collective staff members' skills in detecting fraud have greatly improved, but it usually doesn't take very long for fraudsters to find a new angle on an old scam," Silsby says. Better communication needed At Damariscotta-based First National Bank, fraud losses in 2022 amounted to $232,000, and the bank expects a similar number in 2023, according to Tony McKim, the presi- dent and CEO. While the figure includes all types of transac- tions, he says that check fraud makes up a signifi- cant chunk of the total. e bank has one full-time employee dedi- cated to fraud and two to three others who help with investigations and reporting. First National only recently began tracking the value of attempted fraud prevented by employees, which stood at $1,008,906 at the end of the third quarter. In part, McKim blames the rise in check fraud on antiquated regulation. "e laws around check processing are out- dated, which makes it difficult for financial insti- tutions to communicate with each other when fraud occurs," he says. "Improvements in these rules could help combat check fraud." To avoid fraud, McKim recommends that customers mail checks from inside a post office rather than dropping them into a public mailbox. It's also a good idea to keep tabs on check activ- ity in one's account and notify the bank immedi- ately if anything looks amiss, he says. Another tip: "Explore other payment options, like autopay bill pay, ACH and Zelle to make payments securely within your online banking platform instead of using a check." Efficiency Maine's Commercial Property Assessed Clean Energy (C-PACE) program allows businesses to finance building retrofits, gut rehabilitations, and new construction with no upfront costs. C-PACE financing allows commercial property owners to finance energy improvements on their buildings and repay the investment over a longer period of time. The borrowed capital is secured by a property tax assessment with an associated lien on the property. For details on participation and eligibility, visit efficiencymaine.com/c-pace/ or email C-PACE@efficiencymaine.com. Finance Your Business's Energy Upgrades With C-PACE » C O N T I N U E D F RO M P R E V I O U S PA G E F O C U S The laws around check processing are outdated, which makes it difficult for financial institutions to communicate with each other when fraud occurs. — Tony McKim First National Bank

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