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Wal-Mart Cell Phone Camera Check Scam Warning

Summary:
Supposedly official internal memo to employees of the Department of Public Safety and Corrections warns about a widespread scam in Wal-Mart stores in which employees defraud customers by using a cell phone camera to create fake checks (Full commentary below).



Status:
Unsubstantiated - Warning was not sanctioned by the DPS

Example:(Submitted, August 2007)
Subject: Fw: DPSC WalMart Warning Letter.pdf

I know a lot of us shop at Walmart, so I thought you should read this. This is happening in Baton Rouge and I'll bet in Houston, too.

(See attached file: DPSC WalMart Warning Letter.pdf)


[Transcript of PDF text:]
Department of Public Safety and Corrections
Public Safety Services

July 26, 2007

To All Employees:

DO NOT write checks at any Wal-Mart. There is a multi-city fraud and theft ring currently operating in Wal-Mart involving numerous employees. When you pay by check the clerk takes a picture of your check using the camera on their cell phone. This information is then downloaded, fraudulent checks made from your account, and then "let the fun begin" for the thieves. One individual that this was done to had two checks totaling over $4000.00 posted against their checking account.

Some of you are thinking "well there is no way this will affect me because I don't keep that kind of money in my account." WRONG!!!! As stated, this involves numerous employees. The picture is taken and after the data is downloaded the checks are printed. Later, this fake check is given to same or another cashier. The cashier DOES NOT run the check through the check fax inquiry to verify the funds. The check is placed in the drawer for deposit and no one is the wiser until some days later when the check hits your account. One of the main things being purchased by the fraudulent checks are gift cards. How nice. With a gift card from Wal-Mart, any member of the theft ring can purchase items from any Wal-Mart or Sam's Club in the nation. No identification is required to purchase with a gift card, so Sally or Sam in Shreveport can be buying that fabulous plasma TV they have always wanted with the gift card bought by a fraudulent check drawn on YOUR account and no one is any the wise until you get your bank statement or you begin to get NSF notices in the mail.

This activity has become so widespread and so numerous have been the occurrences that not only is local law enforcement authorities involved in the case, i.e. City, Sheriff, and LSP, but the FBI and the Secret Service is now investigation as well.

So, you have been warned. Protect yourself and your money. It's 2007 and the criminals only seem to get smarter.

Spb/Rjp

Screen shot of PDF warning
Screenshot of Walmart warning PDF




Commentary:
This message, which is rapidly circulating via email as a PDF attachment, warns that a widespread check scam involving Wal-Mart employees has been uncovered. The message claims that Wal-Mart clerks in several US cities are using cell-phone cameras to capture an image of checks submitted by customers. According to the message, bogus checks that draw on the customer's account are subsequently created from the captured image and then used to purchase items such as gift cards.

The PDF document is a scan of a supposedly official internal letter to employees of the Louisiana Department of Public Safety and Corrections that includes the department's logo, letterhead and footer. However, a statement published by the Louisiana State Police reveals that the letter is, in fact, unofficial and unauthorized:
Unauthorized Letter Improperly Warns of Alleged Wal-Mart Fraud Ring

On Thursday, July 26, 2007, an unauthorized letter was distributed to employees in the Baton Rouge field office of the Louisiana Department of Public Safety and Corrections, Office of Motor Vehicles, concerning an alleged multi-city fraud and theft ring operating at Wal-Mart involving Wal-Mart employees. It was alleged in the letter that the employees of the store would obtain a customer's checking account information, and the information would be used to create fraudulent checks.

This letter was not official or sanctioned in any way by the Department of Public Safety; unfortunately this letter was made public. The Department will be conducting an internal investigation and, at the conclusion of the investigation, will take the appropriate corrective and/or disciplinary action.

Members of the public should not rely on information contained in the letter. As always, consumers are cautioned to take steps to limit disclosure of their personal information and to be aware of their surroundings.

The Department of Public Safety and Corrections regrets any inconvenience to Wal-Mart Corporation, its employees, or members of the public who may have learned of the letter in question.
Even without this denial, the emotive and informal writing style of the message, and the lack of concrete details and references suggests that it is quite unlikely to be an official DPS publication, but rather the work of an individual department employee. It inclusion on official Department of Public Safety and Corrections stationary has afforded the message a degree of undeserved credibility.

While it has been established that the message is not an official police department scam warning, it is nevertheless unclear if the specific claims in the warning are just fabrications or do actually contain elements of truth. Fraudulent activities like the ones described in the warning are not entirely implausible. Cell phone cameras have become more sophisticated, and it cannot be ruled out that a clever group of criminals might manage to carry out scams like the one described. However, I could find no evidence to suggest that such crimes have actually occurred. If the crimes were really as widespread and as common as claimed in the message, then they would certainly have been widely reported in the media. According to the message, such crimes have become so common that a range of law enforcement agencies, including the FBI and the Secret Service, are now involved. However, given the lack of any official statements or warnings by such agencies, it seems clear that this claim is unfounded.

Other warnings about the potential use of cell-phone cameras to steal credit card numbers from unwary shoppers have circulated for several years. Again, however, there is little evidence to indicate that the tactic is actually being regularly used by identity thieves.

Of course, like any large company, Wal-Mart has had its fair share of unscrupulous employees including some who have engaged in check fraud. In 2006, a Wal-Mart employee was arrested for such a check scam. An article on abc13.com notes:
A former Wal-Mart employee is behind bars for her role in what authorities are calling a check fraud scheme. When you write a check at Wal-Mart, you hand it to a clerk who then runs the check through an electronic scanner and hands it back to you. Unfortunately some Wal-Mart shoppers in Spring did not get their checks handed back to them and it cost them thousands of dollars.

Pam Davis never thought writing a $37 check at Wal-Mart would cost her thousands of dollars, but that's exactly what happened.

She said, "I had gone to Wal Mart and written a check for $37 and did not realize I did not get that check back, which is the custom with electronic transfer. You are supposed to receive the check back."
However, this scam did not include the use of cellphone cameras, nor was the scam repeated by different Wal-Mart employees in different cities.

Thus, this message is not the legitimate police warning that it appears to be and its claim that cell phone check fraud by Wal-Mart employees is common and widespread is unfounded.

That said, criminals are constantly finding new ways to defraud us and are likely to use any technology that helps them achieve their aims. Shoppers need to remain on the look out for attempted fraud whenever they conduct transactions. Keep a close eye on how staff-members handle your checks and credit cards. Beware of other customers who may try to harvest personal information by peering over your shoulder as you pay for items. And make yourself aware of the ever-increasing threat of identity theft.

References:
Unauthorized DPS Letter
Are Phone Cameras being used to Steal Credit Card Information?
Former Wal-Mart employee arrested for check fraud scheme in Spring
Deter. Detect. Defend. Avoid ID Theft

Last updated: 7th August 2007
First published: 7th August 2007

Write-up by Brett M. Christensen