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Special Alerts

July 12, 2005

TO: CHIEF EXECUTIVE OFFICER (also of interest to Security Officer)
SUBJECT: Fraudulent Checks Created Using Qchex.com
Summary: Several financial institutions, retailers and consumers have reported receiving fraudulent checks that were created using an online service called Qchex.com.

Several financial institutions, retailers and consumers have reported receiving fraudulent checks issued via Qchex.com, a subsidiary of Neovi Data Corporation, San Diego, California. Qchex.com is an online service that enables users to print checks or send checks by e-mail to recipients who could then print them. Financial institutions should be aware that some, but not all, checks created using this service may be fraudulent.

The fraudulent checks may bear actual routing numbers assigned to the drawer bank, along with either actual or fictitious account numbers. A signature is not required on the face of the check, and due to the microprinting aspect, the checks may bypass special handling requirements. The checks may or may not contain Qchex tracking codes.

Financial institutions, retailers and consumers should be aware that Qchex.com provides the following disclaimer: "Because user authentication on the Internet is difficult, you must make your own independent determination regarding the statements and representations of the other party and the party's ability to pay for the delivered good(s) offered for each transaction commenced through Qchex.com." In addition, the following disclaimer is provided under the section "Terms of Use" on the Qchex.com Web site: "Qchex does not guarantee, verify or investigate transactions undertaken by users of Qchex.com."

On a related matter, consumers have reported receiving fraudulent checks issued via Qchex.com for items sold over the Internet. In some instances, these checks were issued for an amount in excess of the actual transaction. Generally, in such circumstances, the sender of the check requested that the overpayment be returned via a wire transfer. Financial institutions should encourage their customers to view with extreme caution any proposed transactions requiring them to wire funds outside of the banking system. Given the nature of the activity, the FDIC has notified law enforcement.

Information about these instruments may be forwarded to the FDIC's Cyber Fraud and Financial Crimes Section, 550 17th Street, N.W., Room F-4004, Washington, D.C. 20429, or transmitted electronically to alert@fdic.gov. Information related to federal deposit insurance or consumer issues should be submitted to the FDIC using an online form that can be accessed at http://www2.fdic.gov/starsmail/index.asp.

For your reference, FDIC Special Alerts may be accessed from the FDIC's Web site at www.fdic.gov/news/news/SpecialAlert/2005/index.html. To learn how to automatically receive FDIC Special Alerts through e-mail, please visit www.fdic.gov/about/subscriptions/index.html.

Michael J. Zamorski
Division of Supervision and Consumer Protection

Distribution: FDIC-Supervised Banks (Commercial and Savings)

Last Updated 07/12/2005 communications@fdic.gov