Precursors of Digital Fraud: Bill, Check, and Credit Book Fraud in the Pre-Digital Age

[Professor]

Abstract: Cybercrime seems to be a product of the digital age alone. But a closer look reveals that its fundamental patterns, psychological tactics, and even business models have deep roots. Long before the advent of the internet and bank cards, sophisticated deception flourished in the world of bills of exchange, paper checks, and credit books. This article is a gentle journey back in time to the origins of financial fraud. We'll see how human ingenuity in circumventing rules and exploiting trust remains remarkably constant, changing only the tools but not the essence.

Introduction: The Eternal Game of Cat and Mouse​

The history of finance is the history of trust. First, people trusted the weight of gold in a coin, then a signature on paper, and today, encryption in a digital signal. And each new form of trust immediately gave birth to new loophole hunters. Carding, phishing, and crypto scams have direct and recognizable ancestors in the era of quill pens, mail coaches, and the telegraph. Studying them, we understand: the fight for security is not a technical race, but an eternal competition between the ingenuity of the attacker and the vigilance of the system.

1. Bill of Exchange: Trust in Debt and Its Forgery​

The bill of exchange (or draft) was the "digital currency" of the Middle Ages and early modern times. It was a written promise to pay a certain amount at a specific place and time. It was the forerunner of modern money transfers and credit cards: it could be transferred from hand to hand, used as a means of payment.

Fraud methods involving bills of exchange were astonishingly complex:

• Forgery of signatures and seals (analogous to account hacking): The masterful forgery of the signature of the person issuing the bill (the drawer) or the person liable to pay (the drawee). This required the highest levels of calligraphy and a thorough understanding of the chemistry of counterfeit ink.
• "Air" or "inflated" bills of exchange (analogous to credit limit fraud): The fraudster would issue a bill of exchange for a large sum in the name of a reputable but fictitious company or a real but unsuspecting merchant. They would then use this "reputable" bill of exchange as collateral for real money or goods on credit, disappearing before the payment was due.
• Chains of promissory notes (the Ponzi scheme before Ponzi): A swindler would issue promissory note A to obtain a loan from B. To pay off promissory note A, he would issue a new promissory note B to person C, and so on. The pyramid scheme would persist as long as new gullible creditors were found willing to accept the paper.
• Exploiting time lags (similar to carding before the block): A bill from London to Venice took weeks to arrive. A fraudster could present a counterfeit bill for payment, receive the money, and disappear before a courier arrived notifying them of the forgery.

Interestingly, a prototype of cyber obfuscation had already emerged back then : fraudsters intentionally wrote bills of exchange in a complicated handwriting with lots of flourishes, making it more difficult to verify their authenticity and easier to make subtle edits (for example, changing the amount).

2. Check: The heir to the bill and a field for creativity​

With the proliferation of banks, the check became the primary weapon of fraudsters in the 19th and mid-20th centuries. Its "take my money from my bank" principle made it ideal for attacks.

• Check counterfeiting (classic "carding"): The skillful copying of forms, watermarks, and, most importantly, the signature of the check drawer. Entire underground workshops existed.
• Checks for non-existent accounts (similar to a counterfeit card): Using forms that have been stolen or counterfeited with fictitious account numbers.
• Checkbook Fraud (Legacy Simulation): Theft or counterfeiting of an entire checkbook, mimicking the behavior of the real account holder who periodically writes checks.
• "Carding" before cards: Theft and cashing of postal money orders. Fraudsters opened mail, seized money orders (similar to data interception), forged identification documents, and cashed them at another branch.

Here, social engineering first appeared on a large scale: A scammer would come to a bank, pose as an important person or their servant, present a skillfully forged check, and, using acting skills and knowledge of banking procedures, receive cash.

3. Credit books and "trust systems "​

Before the advent of universal credit cards, stores and restaurants issued their own credit books for regular customers. These were small books that recorded credit purchases.

Fraud here was localized but subtle:

• Forgery of credit books: Making a counterfeit credit book of a reputable establishment or copying the signature of the manager who issued the loan.
• Using a stolen passbook (similar to stealing a card): The thief did not simply steal a wallet with money, but looked for credit books there to make purchases in the owner's name.
• Abuse of trust (internal fraud): A store clerk could collude with a "customer" to record fictitious purchases in their account and split the proceeds. This is a direct ancestor of modern scams involving fake merchants.

4. Mail Fraud: Phishing on Envelopes and Newspapers​

Before email, the main channel for mass fraud was regular mail.

• Victorian-era "Nigerian letters" ("Spanish Prisoner"): Fraudsters sent letters with a touching story: a noble Spanish prisoner (or the heirloom of a distant relative) needed a modest sum for ransom or paperwork, promising an enormous reward. The principle was the same — playing on greed and sympathy, with an upfront payment of "small expenses."
• Lottery and Prize Scams: Emails claiming to have won a prize and requiring money to be sent for postage.
• Advertising scam (a prototype of pharming): Placing advertisements in newspapers for non-existent products or investment opportunities with a request to transfer money by mail.

5. History Lessons: What Never Changes​

An analysis of pre-digital fraud reveals constants that remain true today:

1. Time Lag Exploitation: Between the initiation of a transaction and its final verification. (Bill/check in transit = transaction before clearing).
2. ID forgery: Signature on bill = card details/fingerprint.
3. Social engineering: Convincing a bank clerk = convincing a cardholder at a call center.
4. Creating the appearance of legitimacy: A "fake" bill from a reputable company = a phishing site with HTTPS and the bank's logo.
5. Using new technologies: Once a check-forging machine, today it is a phishing kit.

But there's a key difference. In the pre-digital era, fraud was labor-intensive and rare. Forging a hundred checks was a Herculean task. Today, with the advent of computers, a single successful phishing attack can compromise the data of hundreds of thousands of people instantly. Scalability is what the digital age has brought.

Conclusion: Not a new war, but new speeds​

By studying the precursors of digital fraud, we're not simply satisfying historical curiosity. We're seeing archetypes of deception that are merely dressed in new technological clothing.

This knowledge gives us two important insights:

1. Humility: The problem isn't "damned technology," but the eternal weaknesses of human psychology and the eternal temptation to bend the rules. Fighting fraud isn't a temporary campaign, but a permanent function of any society.
2. Wisdom: Security measures of the past — watermarks, complex signatures, email verification systems — were responses to the challenges of their time. They demonstrate that security is always built on multiple layers and redundant checks, which makes deception unprofitable.

Understanding this, we can approach modern threats with a calmer and more strategic approach. Digital fraud is not the apocalypse, but another chapter in the long book of human relationships with money and trust. And the best defense is to remember the old tricks, to recognize them in new forms, and to value those slow, human mechanisms of verification and common sense that technology strives so hard to speed up but can never fully replace.