in the newspapers about someone downloading credit card numbers from a website, or manufacturing phony Visa cards in some warehouse in Queens, the truth is, check fraud is much more prevalent. And although the average value of a fraudulent check is less than one thousand dollars, the Office of the Comptroller of the Currency estimates that total check fraud losses exceed $19 billion a year (and if we start giving out more parking tickets it might get a lot worse). Visa and MasterCard losses are less than 10 percent of that. And bank robbers, by contrast, got away with a relatively paltry $68 million in 1999.
Payment by check is far and away the most popular form of payment in the United States, easily exceeding payments by cash and credit card combined. Americans wrote 69 billion checks in 1999, and every year they write a billion more. No one knows that better than criminals. That's why worthless checks are one of the most serious white-collar crimes affecting businesses today. Every day, American banks, savings banks, and credit unions return 1.3 million worthless checks. That's $27 million of bad checks, every single day.
But only about 2 percent of bad check passers are arrested, and only about 62 percent of all bad checks are ever collected. And the conviction rate for bad check passers is lamentably low.
A SLIPPERY SLOPE
Things have changed so much since my days as a check forger. Years ago, when a forger came to a city, there was a great deal of preparation involved if he wanted to forge checks. First, he would have to rent an apartment to establish a physical address. He'd try to find a place he could rent by the month so he wouldn't have to bother with a lease. Still, he'd have to pay the first month's rent along with a security deposit.
Then he'd go down to the County Bureau of Vital Statistics and search through the death records for the year of his birth. He'd find an infant who was born around when he was born and died shortly afterward. He'd copy the vital information off the infant's death certificate - the mother's name, the father's name, and so forth. Armed with this information, he could apply for a birth certificate. After he got the certificate, he'd go down to the Motor Vehicles Department and get a driver's license. Then he'd go to the bank and open an account. That was the risky part, because he had to identify himself to the teller to fill out a new account card and a signature card. Then he had to wait ten days for checks to be printed up. That gave the bank ten days to run a credit bureau report, ten days to check on where he said he was employed, and ten days to contact his previous bank to see how he maintained his account.
None of this is necessary today. You just buy your checks through TV Guide, one of the Sunday magazines you find in newspapers, or over the telephone. Anybody can order anybody's checks. We've made it so easy for people to steal from us. In fact, we're the only country in the world that does make it so easy. In every other country, you have to pick up your checks at the bank. In Australia, for instance, if you want to reorder checks, you have to physically go to your bank branch and place the order. When the checks arrive, you have to return to the bank and get them. Only recently have a few banks in Australia begun to entertain the idea of mailing reordered checks to customers.
This whole notion of ordering checks directly from vendors started in an entirely innocent fashion. About fifteen years ago, a woman in Colorado Springs, Colo., named Miriam Loo had a greeting card and gift company called Current, which she started in the basement of her home. She had the idea of selling novelty checks, personal checks with special designs on them. She began with dogs. There were so many dog-crazed people, she figured they'd get a kick out of putting their dog on their checks. Sure enough, orders flowed in for checks with Beagles and Cocker Spaniels. Then she expanded beyond dogs into sailboats, cars, birds, flowers, whatever you wanted. It was a nice little business.
The DeLuxe Corporation in Minneapolis, the king of checks, found out about this and said, hey, she's encroaching on our turf. DeLuxe went and bought her company and