The following charts and passages were taken from the cover story in the February 1997 issue of Grocery Marketing which discusses the magnitude of the check fraud problem in the United States.
Big Business, big crime
Indeed, payroll check fraud is a flourishing business, which experts say often involves organized crime.
A 1996 study published by Miller's office shows that the average bad check is $73.17, causing supermarkets to lose approximately $13,087.03 per year. In 1995, supermarkets lost more than $70 million due to personal, commercial and payroll check fraud.
With more than 60 billion checks written every year (close to half of which are commercial), some $10 billion are worthless, according to Checkmate Electronics Inc., which makes electronic check readers and other devices designed to prevent check fraud. More than 19 billion checks were written at retail point of sale in 1995.
And consider this: Checkmate Electronics estimates that cumulative check fraud will exceed $254 billion by 2005.
Anatomy of a scam
But that hasn't helped Kroger, he said, referring to a series of scams that have affected stores in the Dallas-Fort Worth area resulting in hundreds of thousands of dollars in losses.
In fact, according to TCI, payroll check losses in 1995 for 59 stores were $434,796; up 3.4 percent from 1994. There were 1,603 checks returned with an average of $271 per check. This year, Dwyer said, after installing TCl's "VPay" system, payroll check returns declined through September by 45.4 percent from the same period a year ago.
Far greater savings would have resulted, Dwyer noted, had store employees not cashed checks for customers even though they were advised to decline, or if they had even submitted the checks for approval in the first place.
Dwyer used a $12,028 loss on July 5 in 18 stores as an example. Checks written on "Teleco Communications" were returned by the bank. One payee, Ingrid Beavers, cashed four checks totaling nearly $1,200. Another, Tyrone Jackson, cashed eight; Anthony Jenkins cashed seven; Montina Lewis, two; Mark Marshall, six; Taylor Marie Oneal, two; Lourele Roberts, six; and Riley Summers, six.
The bottom line: seven different people with IDs in one day cashed 41 bad payroll checks: a theft of $12,028.
No gun. No mask. No violence. Just a computer and a pen.
In its analysis for Kroger, TCI wrote: "Some cashing payroll checks are criminals--not normal Kroger customers--cashing fraudulent checks. "
"Over nine periods, multi-check scam 'runners' accounted for 82 percent of a total of 613 returned fraudulent checks."
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Last modified: 08/23/2007