The Florida Bar

Florida Bar News

Smartphone check-cashing scam could imperil lawyers

Regular News

Smartphone check-cashing scam could imperil lawyers

As soon as new technology is developed to make life easier, you can be sure someone will try to find a way to exploit it for criminal gain.

It should come as no surprise that charlatans have come up with a new scam using smartphones that has been perpetrated on at least one Florida title agent and could be easily adapted to target lawyers.

The Florida Land Title Association recently reported an incident to its members where a title agent fell victim to a fraud scheme involving depositing checks via smartphone.

According to a bulletin Old Republic National Title Company in Tampa sent its title agents and officers and an alert issued by The Fund, here is how it went down:

A couple was issued a check for closing proceeds. They then left the agent’s office but returned several hours later and asked the agent to wire the proceeds instead. The agent took the check back, voided it — rather than stopping payment on it — and wired the proceeds to the couple’s account. The agent was apparently completely unaware that the check had already been deposited using a smart phone.

“More and more banks, and even online payment sites like PayPal, offer downloadable applications for smart phones like iPhone and Android that use the phone’s camera feature to take a picture of the front and back of a check and deposit it into the payee’s account. The danger in this technology is that there are no markings on the check indicating whether it has been processed because the image is only scanned and not run through a machine as it would have been had it been deposited at an ATM or with a bank teller,” Old Republic warned.

The key to preventing such a scam is to protect checks as if they were cash while they are in your office and also to refuse to exchange them for other forms of payment after they have left your office.

“Even exiting the closing room for a few minutes to make copies or get someone a glass of water and leaving signed checks on the table could result in disaster, since it takes less than a minute to take a picture of the front and back of a check with a smart phone and deposit it,” according to Old Republic’s bulletin. “Upon returning to the room, the agent might then be told that the sellers had changed their minds about the check and want a wire instead. The agent might not catch on to the scam until it is too late because the check will have been deposited without being removed from the closing room.”

News in Photos