CHEQUE FRAUDS

Evening Star, Issue 18698, 29 July 1924, Page 7

CHEQUE FRAUDS

CARELESSNESS HELPS PORGEE3,

The discussion in the Legislative Council on tlio subject of tho liability of banks when cheques have been fraudulently altered (says the Auckland ‘Star’) has created some interest in financial and commercial circles. Business people report that they are continually receiving cheques so carelessly drawn as practically to invite fraud. In America fraudulentlyaltered cheques have entailed the loss of millions of dollars, and during the last few months a new system has been devised which prevents the wholesale use of chemicals, tho fAvorile method of treating cheques. A material has been discovered Which prints in the body of the document a pattern which entirely disappears when any chemical is applied to it, and tho forger finds himself in possession of a, document in which the original pattern is replaced by hundreds of copies of tho line “Payment stopped.” In New Zealand alterations of this nature are very rare, loss usually occurring only in easily altered amounts. It is tho simplest thing in tho world to alter “eight” to “eighty” if_ the, forger has reason to believe that tho larger amount will bo paid on presentation of tho cheque. This actually happened in Auckland a few years ago. The danger is not met by the suggestion of tho Hon. A. S. Malcolm, M.L.C., that space bo left on tlio form for it to be stated that tho cheque- is not above a certain amount. In tho case cited “nine” in this' spare could easily have boon altered to “ ninety,"’ for most of the danger arises through carelessly sprawling writing along tho form, instead of joining all tho words together. Most of the large houses take the precaution of using a, stamping machine, which not only prints iho amount, but actually cuts the letters into tho paper and leaves no spaces for adding .anything. These machines, however, are not in common use, and therefore give no protect inn to the general public. There is aho (he difficulty that the cheques get mutilated. One merchant yesterday produced a Government cheque, stamped in this way right across the middle, where it had been folded many times during tho weeks in which it had passed from ono owner to another in accordance with the practice of treating Government cheques as bank notes. The amount was entirely obliterated, and anyone, could easily have altered the amount in figures at the bottom.