Check Forgery Datapoint of the Day

Luke Mullins talks to Frank Abagnale, the acknowledged expert on such matters:

Check forgery is now at about $20 billion a year, up from about $12.6 billion in 1996. There was an increase in check forgery of over 25 percent last year.

I simply don’t understand why the US still uses checks, if it’s costing $20 billion a year. That’s something like $200 per household per year – more than enough money to make it worthwhile switching, as all of Europe has done, to electronic payments. If there aren’t any checks, there isn’t any check forgery – and when was the last time you saw a check in Europe? They basically don’t exist, certainly not personal checks.

But if the US is perenially three years behind Europe in terms of cellphones, it’s 20 years behind in terms of payment systems. It costs banks much less to process an simple funds transfer than it does to process a check, even before you include the costs of forgery. Yet banks still charge through the nose for wire tranfers while happily processing checks for free.

The craziest bit of all is when I’m using online banking: if I have a friend I want to give some money to, I can wire them the money directly at vast expense to myself, or I can type in their name and address and send them a physical check in the mail – for free. And I doubt the banks are making $20 billion a year in interest on my money while it’s sitting in a post box somewhere.

Still, if it hasn’t happened by now, it’s probably not going to happen at all, and check forgery will continue to be a major problem unless and until we bypass bank transfers entirely and start transferring and spending money directly from our cellphones. So, not for the foreseeable future, then. As you were, check forgers: you have a bright future ahead of you.

This entry was posted in banking, personal finance. Bookmark the permalink.