Everyone knows what a serious financial crime looks like: robbing banks like Bonnie and Clyde qualifies, as does conning unsuspecting victims out of millions of dollars like Frank Abagnale, whose story was told in the movie, Catch Me If You Can. Financial crimes seem unlikely to ever impact the lives of most everyday Americans, but there are a surprising number of things Americans habitually do with checks, cash, and credit that are illegal.
“It’s surprisingly easy to adopt a dicey financial habit under the guise of ‘everyone does it,’ ‘I was just trying to help,’ or ‘it seemed like a good idea at the time,’ only to discover later that what you’ve done is, in fact, illegal,” as Bankrate explains. “The odds of getting caught might seem slim, but the consequences can be harsh.”
Here’s a look at the six most common ways Americans get on the wrong side of the law while making everyday financial transactions, based on research conducted by financial research firm Bankrate. Some items on this list may seem obvious, yet the fact that Bankrate chose to include them in its analysis suggests that they occur more frequently than you would imagine.
1. Signing someone else’s name on a check
It may seem like it’s not a big deal to sign the name of a family member or partner on a check; they may have been too busy driving to sign on the dotted line, or they may have been unexpectedly hospitalized. Your intentions may have been the best, but that does not change the fact that constitutes forgery and is illegal, unless a power of attorney is in effect. Even if a parent signs the name of a child away at college, or if a child signs the name of a parent who has been incapacitated, they could still be found guilty of a financial crime.
Carol Kaplan — formerly the spokeswoman for the American Bankers Association in Washington, D.C. and now Director of Public Affairs at National Insurance Crime Bureau — told Bankrate that signing someone else’s name on a check is usually considered to be forgery, and is illegal in many states. “In most cases, it’s on behalf of a loved one who probably isn’t going to object, but people should know that that’s forgery,” she added.
In all 50 states, forgery is a felony, punishable by a number of different punishments, ranging from jail or prison time to significant fines to probation, and to restitution, or compensating the victim for money or goods stolen. Certain types of forgery are considered to be misdemeanor crimes, and therefore are punished more leniently.
2. Writing bad checks
Sure, most banks now offer overdraft protection for when a customer makes a debit card purchase or writes a check that puts his or her account in the red. Accidents do happen, but knowingly writing a check that you do not have the funds to cover is illegal. And, according to Kaplan, the risk is larger than you may think; people do get prosecuted for writing bad checks.
“Not only are there criminal penalties involved, but you get put on a list of bad check writers,” she told Bankrate. “A lot of places won’t accept your checks, and you may have difficulty opening a bank account again because you’ve been labeled as a fraudster.”
3. Copying United States currency
Again, this may seem like a pretty straightforward thing to avoid; of course, you cannot print out money to buy goods or services. While it has become increasingly easier for just anyone to counterfeit U.S. currency thanks to the proliferation of high-tech printers, copy machines, and scanners, the felony comes with fines of up to $250,000 and up to 20 years in prison. But even if you are simply reproducing bills or coins for a game, a joke, or another purpose, you have to be careful. Claudia Dickens, a spokeswoman for the U.S. Treasury’s Bureau of Engraving and Printing, told Bankrate that there are specific guidelines established by the Secret Service to follow. “If you make a copy of currency, it has to be at least 150 percent larger than what you and I carry in our wallets or 75 percent of its normal size. If you make it in color, you can only do one side,” she said.
4. Defacing U.S. currency
We’ve all seen it: the devil horns inked on George Washington’s portrait on the one-dollar bill, Abraham Lincoln made to look like the Lord of the Rings’ Gandalf on the five-dollar bill, and may be even Andrew Jackson redrawn as Ronald McDonald on the twenty. But deliberate defacement of U.S. currency is illegal, although you’re okay if your cash accidentally goes through the wash or gets eaten by a pet. Federal law stipulates that “whoever mutilates, cuts, defaces, disfigures, or perforates, or unites or cements together, or does any other thing to any bank bill, draft, note, or other evidence of debt issued by any national banking association, or Federal Reserve bank, or the Federal Reserve System, with intent to render such bank bill, draft, note, or other evidence of debt unfit to be reissued, shall be fined … or imprisoned not more than six months, or both.”
5. Using someone else’s identity to obtain credit
Obtaining a line of credit under someone else’s name seems like an obvious misstep. More so than any item on the list, there may be little room to plead innocence or naiveté as an excuse for this blatant form of identity fraud. But naturally there are exceptions. As Kaplan told Bankrate, she has seen instances where a parent beset with horrible credit opens new credit accounts under his or her child’s name. “It’s illegal to pose as someone else,” she said, “but there is also a moral question: Do you want to punish your child and wreck their credit as well?”
6. Lying on a Home Loan Application
Mortgages are a burden. In the United States, the number of homeowners whose debt is greater than the value of their homes is close to plateauing at a level 10 times higher than a healthy market should experience, according to a recent report from housing data company Zillow. This reality means that underwater mortgage rates have become entrenched, and it means that many Americans are stuck paying more than they should on their mortgages. In the first quarter of 2012, a record high of 31.4% of all U.S. mortgage holders were underwater. That share has since dropped to 15.4%, which amounts to 7.9 million homeowners. Of that total, 11.8%, or more than 930,000 borrowers, owe more than twice the value of their homes.
The weight of underwater mortgages may make it tempting to inflate income or hide debt on a refinancing application. Even for new buyers looking to secure a home loan those tricks may seem like a necessary risk, especially as home prices have accelerated. But, of course, this is fraud. “You should always be honest,” Kaplan told Bankrate. “We all go through difficult financial periods, and it’s tempting to want to fudge. But if you get caught, it’s going to lead to huge headaches, and you will sleep better at night knowing that you aren’t living with a lie.”
Follow Meghan on Twitter @MFoley_WSCS
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