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What are the Different Types of Bank Fraud Cases?

Jessica Ellis
Updated May 16, 2024
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Bank fraud is a serious financial crime that involves the unlawful obtainment of funds from a bank or other financial institution. Bank fraud cases are usually distinguished from outright bank robbery as they rely on the use of deception and confidence tricks rather than the threat or use of violence. Bank fraud cases come in many different forms, including several types of check fraud, identity theft, embezzlement, and document fraud.

Many bank fraud cases involve the theft, forgery, alteration, or misuse of checks. The simplest form of this type of fraud may be check theft, where the criminal steals checks from another person, then uses them to make purchases. Criminals may also use forgery to alter checks they receive for a transaction, for instance changing a $20 US Dollars (USD) check into a $200 USD check by adding a zero. Merchants can help prevent check fraud by instituting strict identification policies that ensure that a customer cannot use a check that is not verified through ID; consumers can also help stop these fraud cases by scrupulously examining their checking history to ensure that all checks match receipts.

Check fraud can also be done by the rightful owner of the checks. Check kiting, or passing bad checks, is a type of bank fraud that involves writing checks despite knowing that there are insufficient funds in a bank account to cover the purchases. The frequent occurrence of this form of check fraud is why many businesses will only accept checks up to a certain USD value, and why many financial institutions charge a high fee for bounced checks.

Bank fraud cases involving identity theft are a serious and growing problem in the era of the Internet. With so many transactions being made online, thieves and hackers are frequently able to access bank account and credit card information from unwitting consumers. Fraudsters can also use obtained names and addresses to apply for fraudulent accounts, credit cards, and loans.

Embezzlement occurs when a bank worker steals funds from customers or from the bank itself. Banks guard rigorously against embezzlement in a variety of ways, since this type of bank fraud can be extremely damaging to the institution's reputation. Bank fraud cases involving internal theft usually are managed by people with considerable power within a bank branch, since they have the most access and opportunity and are generally perceived as trustworthy.

Document fraud involves the creation of fake documents to help a fraudster get a loan or open an account. Documents that may be fake include ID cards, property deeds, references, or asset statements from other institutions. Fraudsters may use these documents to open accounts under assumed identities or to receive preferential rates and account options. In some cases, the criminal will try to get a loan using fake names and fake documentation, then “disappear” after receiving the funds, leaving the bank at a serious loss.

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Jessica Ellis
By Jessica Ellis , Writer
With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica Ellis brings a unique perspective to her work as a writer for SmartCapitalMind. While passionate about drama and film, Jessica enjoys learning and writing about a wide range of topics, creating content that is both informative and engaging for readers.

Discussion Comments

By SteamLouis — On Mar 05, 2014

Does anyone know the percentage of bank fraud cases where bank employees are also involved?

I'm assuming that it must be a fairly large number since bank employees have access to everything. If a bank employee is involved in the fraud, it's called embezzlement right?

By discographer — On Mar 04, 2014

@literally45-- I was a victim of credit card information theft. My card information was stolen and used to make online purchases. So I agree with you that this is a very real risk. However, most banks have policies to protect their customers.

When I noticed charges on my account that I didn't recognize, I called my bank and told them about it. They took the charges off immediately and returned my money. I saw more charges a few days later. The bank again returned my money. They canceled my card and sent me a new one.

So even though this type of fraud occurs frequently, I don't think this should prevent people from making online purchases. Of course, it's important to purchase from large, well known online sellers/sites that are trustworthy and reputable.

By literally45 — On Mar 04, 2014

Internet bank fraud is very common nowadays. Hackers can even get through reliable web stores and steal card information. I'm afraid to make purchases online for this reason. If I have to buy something online, I use a payment service so that the online merchant never sees may bank account information or credit card information. I think that this is relatively safer, although no method is 100% safe.

Jessica Ellis

Jessica Ellis


With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica Ellis...
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