A Midlands car breaker has recently been targeted by cheque-fraud criminals. The incident led to one fraudulent cheque for over £2000 being processed by the bank and another cheque being intercepted. Thankfully, the bank was quick to recognise the fraud has returned the funds to the scrap yard account.
It is not yet clear exactly what happened, but it is believed that someone has managed to make copies of the breaker’s cheques. This is not necessarily the person that sold the scrap car to the breaker’s yard, as the cheque could have been intercepted and used to make copies. But we would like to advise everyone in the trade to check your cheque payments very carefully.
Could this Fraud have Occurred before the Cash Ban?
If you run a scrap yard, prior to the cash ban, would you have turned a customer away if they wanted a cheque payment? Probably not. So you could have been affected by cheque fraud before the change in the law. In fact, it would have been easier for a criminal before the cash ban was introduced, because they wouldn’t have needed photo ID or proof of address to sell the car.
The cash ban introduced with the Scrap Metal Dealers Act 2013 means that now your payments are cheques or bank transfers, your business is more vulnerable to fraud. Should you be concerned? Yes, but only to an extent. As long as you conduct your business properly, take the necessary ID and recent utility bill, and keep an eye on your bank account, you should be okay – the bank will usually protect you against, and reimburse you for, fraudulent payments.
The Problems with Photographic IDs and Proof of Address
By law, scrap yard operators need to get photographic ID and a recent utility bill from the seller of a scrap car. The theory is that this will provide a record that can be used to track the sellers and will help authorities tackle metal theft. But where is the protection for you, the buyer? With no system of validation in place, how can you be sure that the identification is genuine? The person standing in front of you may well be the person shown on the passport, but who is to say the passport is genuine?
We contacted www.actionfraudpolice.co.uk, and they told us that any false IDs would be used in investigations as evidence and could help the police connect incidents of fraud. That’s all well and good, but wouldn’t it be better if you could actually detect a fake ID before you handed over your money?
The technology to check the authenticity of identification is available. Right now, there are companies that can provide you with systems that will tell you if a passport or driving licence is potentially fake in just a few seconds. They compare the identification to a huge database of passports and driving licences, covering most countries, and warn you if there is no valid match. This can provide extra peace of mind, but at an added cost.
The real problem is that the scrap car industry was not sufficiently prepared for the Scrap Metal Dealers Act 2013 as it was implemented very quickly. Had scrap car dealers had more warning about the cash ban and been educated about the potential issues with cheque payments, they would have been able to prepare for the change. Know Your Customer (KYC) has been in place in other industries for years, and with more warning, the car breaker industry would have had time to adopt some of the systems in place in other regulated businesses.
“The new law was rushed in too quick.” the victim of the cheque fraud told us. “It wasn’t publicised enough either. When they made changes in 2012, it was everywhere, on the TV, in the paper. But the law that affects us car breakers just seemed to come out of nowhere and we weren’t really prepared for it. When it happened, I didn’t think that using cheques was going to put me at risk of fraud. Now I’m scared to use my chequebook.”
7 Ways You Can Protect Your Scrap Business Against Cheque Fraud
Payments involving cheques are always going to be prone to fraud, but there are some things you can do to help protect your business:
Use bank transfers where possible. Some customers may be unwilling to provide you with their bank account details, in which case you will need to use a cheque and take other precautions.
Make sure access to your chequebook(s) is restricted.
Check IDs and Proof of Addresses very carefully. If anything looks slightly off or feels wrong, ask for more proof.
Never issue a blank cheque.
Be careful when you write your cheques. Do not leave enough space for the numbers or wording to be easily altered.
Check your cheque payments yourself, on a regular basis. Do not rely on your bank to identify fraudulent payments. They can miss payments, as we have already seen.
Look into the possibility of using other payment systems and identity checking technology (Know Your Customer checks). You may decide that the additional peace of mind is worth the extra cost.
Catch Me If You Can
Sometimes, you read about a crime and, although it appals you, you can’t help but admire the criminals’ cunning. This cheque fraud isn’t one of those cases. No, this is one of those crimes where you just shake your head in disbelief and think “Someone’s been watching too many films. There’s no way they’re not going to get caught.”
The cash ban was introduced to help tackle metal theft and, although it makes scrap dealers a target for fraudsters, it also increases the likelihood of them being caught.
Come on, really, what chance has the fraudster got when:
They have provided photo ID and a proof of address (even if it is fake, it will give police a lead)The cheque may be deposited in a branch or an ATM, many of which have cameras
The organisation that cashes the cheque will also conduct ID checks.
RMC vs the Fraudsters
Remove My Car will do everything we can to help the scrap car industry adapt to changes in the law and tackle fraud. If there is information or news we feel our customers, members or other scrap car companies need to know, you’ll find it right here in our RMC blog.
Have you been the victim of fraud since the cash-ban? If so, get in touch, we would love to hear from you.