Walmart Check Theft Scam

Accounts of check fraud being perpetrated at Walmart stores by employees and customers.


Scam:   Accounts of check fraud being perpetrated at Walmart stores by employees and customers.


SCAM


Example:   [Collected via e-mail, July 2007]

 
Origins:   The image displayed above supposedly reproduces a 26 July 2007 memo (circulated as a PDF) from an official with Louisiana's Department of Public Safety and Corrections (DPSC) warning employees about a multi-city check theft ring operating out of Walmart stores. According to the memo, Walmart employees had been using cell phones to photograph customer checks, then employing the information obtained from the images to produce fake checks that are used to buy gift cards.

As for the question of whether this memo actually was written by a Louisiana official, we note that the Louisiana State Police (LSP) disclaimed the memo's appropriateness without denying that it originated within the DPSC:
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.
As for the content of the memo, we note that instances of check fraud have been tied to a then-new practice (used in some Walmart stores) of processing checks not by the "traditional" method of retaining them and submitting them to banks for deposit, but by using them as authorizations to initiate electronic funds transfers (EFTs) and immediately returning them to customers. In some cases, dishonest sales clerks have abused this procedure by deliberately failing to return checks to customers, then re-scanning the checks multiple times and using the ill-gotten proceeds to purchase gift cards and other merchandise.

For example, TV station KTRK in Houston reported the following check-theft scam by a Walmart employee in December 2006:
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 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."

Davis says — and authorities confirm — a clerk at Wal-Mart never returned Davis' check at the time of purchase, [so] the clerk was able to re-run the check through the electronic reader again and again.

Five times, they changed the amounts each time," Davis claimed. "It was almost $3,000."

Authorities believe the clerk gave the checks to other people who then went on shopping sprees inside the store.

Capt. Mark Herman with Precinct 4 said, "In some of the cases they were getting $300 Wal-Mart gift cards, clothing, just all kinds of purchases."

Constables say the clerk did the same thing with checks written by other Wal-Mart customers.
February 2016 also saw the sentencing of a Walmart customer who (along with his wife) defrauded other customers of hundreds of thousands of dollars through the method of peeking over their shoulders to obtain personal information which the couple used to create counterfeit checks:
A man who cashed $300,000 worth of counterfeit checks using personal information stolen by peeking over the shoulders of hundreds of Wal-Mart customers was sentenced to prison.

Robert MacVittie and his wife lined up behind customers trying to cash payroll checks at "dozens and dozens" of Wal-Mart stores in 20 states and recorded them providing their Social Security numbers, Assistant U.S. Attorney Gregory Melucci said at the hearing where MacVittie received a 34-month sentence. The couple would then use the victims' identities to create counterfeit checks, which they cashed at other Wal-Marts.

Melucci called MacVittie, 35, and his wife Jennifer, 32, "the Bonnie and Clyde of counterfeit checks."

More than 400 people had their identities used on the successfully cashed counterfeit checks, Melucci said.
Although it is possible a similar type of fraud could be effected by clerks' surreptitiously using cell phones to photograph customer checks, we have not been able to verify that this specific form of theft is occurring, much less that is taking place on a multi-city level by organized rings of Walmart employees.

A few tips can be helpful to shoppers to avoid falling victim to this sort of fraud:

  • Be aware of how the stores you patronize process checks. If they scan checks to use them as EFT authorizations, be sure your check is returned to you before you leave the checkout counter.
  • Use your bank's web site to monitor your checking account transactions online and notify your bank immediately if you spot any suspect transactions.
  • Using credit cards (or debit cards) rather than checks generally makes it easier to challenge fraudulent transactions and limit your liability for illegitimate charges.


Last updated:   7 February 2016


Sources:

Ehling, Jeff.   "Former Wal-Mart Employee Arrested for Check Fraud Scheme in Spring."
    KTRK [Houston].   6 December 2006.

Mandak, Joe.   "'Shoulder Surfing' Husband Gets Prison in Walmart Check Scam Targeting Hundreds."
    WTAE [Pittsburg].   4 February 2016.

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