Federal banking regulators have issued an alert about Qchex.com, a Web site that lets Web users initiate traditional paper check payments through e-mail. The alert follows an MSNBC.com story in May chronicling complaints about fraudsters using the service.
At Qchex.com, visitors can create checks that draw funds from nearly anyone's checking account -- as long as the user has the correct bank routing number and checking account number. Those numbers are found on the bottom of every check.
In its terms of service, Qchex says it does not attempt to verify the identity of its users.
"Several financial institutions, retailers and consumers have reported receiving fraudulent checks issued via Qchex.com," the alert, issued Tuesday by the FDIC, says. The alert is titled "Fraudulent Checks Created Using Qchex.com."
"Financial institutions should be aware that some, but not all, checks created using this service may be fraudulent," it says.
Michael Benardo, manager of the Cyberfraud and Financial Crimes Section at the FDIC, said the alert was issued because there has been a steady increase in complaints about the service. But he said Qchex is used for legitimate check payments, too.
The agency plans to take no action against San Diego-based Qchex, he said. "We don't have any authority over the company because they are not a bank...they are not claiming to be a bank," he said.
The FDIC alert was sent specifically to bank executives, so they can be on the lookout for check fraud trends. But the alert is also public information and posted on the agency's Web site.
Qchex COO James Danforth, who said he was on vaction in France when reached on a cell phone, said he hadn't seen the alert and wasn't prepared to comment on it. But he defended the company's practices, saying any would-be criminal with a laser printer or Internet access could do what criminals are doing on his Web site -- print up fraudulent checks using account numbers and routing numbers.
"It's pretty easy to point the finger at Qchex because we are right there in front of everybody," he said. "But if you point the finger at us you need to point fingers at Hewlett-Packard for providing a printer, and at America Online for providing an Internet connection."
