Let’s assume you’re a nice, honest person. You would never, ever contemplate committing a serious financial crime like forgery, counterfeiting or loan fraud.
But it can be surprisingly easy to find yourself breaking the law by adopting a dicey financial practice that seems innocent. You tell yourself, “Everybody does it,” “I was just trying to help,” or, “It seemed like a good idea at the time.” The odds of getting caught might seem slim, but the consequences can be harsh.
Here are 6 money habits you should quit now.
The Bankrate Daily
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Signing someone else’s name on a check
Signing a check in another person’s name is generally considered forgery and would violate the law in most states, warns Carol Kaplan, a former spokeswoman for the American Bankers Association in Washington, D.C.
But suppose you sign an elderly parent’s name because the parent is incapacitated, or you sign your child’s name because the kid is away at college. Guess what? Those signatures are still forgeries, unless a power of attorney is in effect.
“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,” says Kaplan, who’s now with the National Insurance Crime Bureau.
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Using someone else’s identity to get credit
Trying to obtain credit by using someone else’s name and identity is obviously not right. But suppose — and Kaplan says she has heard of such cases — a parent whose credit has been ruined uses a child’s name and identity to open new credit accounts. Is that a problem? Absolutely.
“It’s illegal to pose as someone else,” Kaplan says, “but there is also a moral question: Do you want to punish your child and wreck their credit, as well?”
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Lying on a home loan application
Homebuyers and homeowners who want to refinance may be tempted to fudge their income or hide some debts to improve their chances that a lender will say “yes.”
But lying on a loan application is fraud, and lenders do check up on applicants’ information, Kaplan says.
“You should always be honest,” she says. “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.”
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Writing bad checks
Many banks offer overdraft protection that kicks in if you write a check that exceeds your account balance. But writing a check that you know is no good is illegal. The risk isn’t negligible: Kaplan says some 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 says. “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.”
Color printers, scanners and copiers make it surprisingly easy to replicate U.S. or foreign currency. But it is illegal to print your own money, even if all you want to do is make play money for the kids.
It’s OK to reproduce U.S. currency only if you follow the guidelines established by the U.S. Secret Service, according to Claudia Dickens, a spokeswoman for the U.S. Bureau of Engraving and Printing, part of the U.S. Treasury in Washington.
“If you make a copy of currency, it has to be at least 150% larger than what you and I carry in our wallets or 75% of its normal size. If you make it in color, you can only do one side,” Dickens says.
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Defacing US currency
Dollar bills and other U.S. currency aren’t meant to be run through the clothes washer, written on or chewed up by pets. Although accidental damage to currency normally isn’t illegal, deliberately defacing it is.
Federal law prohibits any action that mutilates, cuts, defaces, perforates or glues together U.S. currency or otherwise renders bills unusable.
“It really becomes illegal if you deface it in any way,” Dickens says. “When I say, ‘deface,’ that means you make it unusable. A merchant won’t accept it; if it’s been glued, it won’t fit into a vending machine.”
The law doesn’t offer specific examples of usability, but common sense should apply.