Check fraud is using paper checks to obtain money illegally from an individual or a business. Check fraud can take many forms, with some of the most common methods being the use of counterfeit checks, stolen checks, or altered checks.
Signs of Check Fraud
check lacks perforations
check number is missing or does not change
check number is low
your check was never received by the intended recipient
your check(s) were stolen from your mailbox and deposited into an unknown account
Statistics
90% of bad checks are written on accounts less than one year old.
In 2022, there were roughly 680,000 reports of check fraud, up from 350,000 in 2021 according to FinCEN.
US Postal service reported roughly 300,000 complaints of mail theft in 2021. More than double from the year prior.
Americans wrote 3.4 billion checks in 2022. Down from nearly 19 billion in 1990.
Criminals are becoming more sophisticated in their scams and besides just washing checks, are using the personal info on the checks to commit other fraud and crimes.
Common Types of Check Fraud:
Forgery: This occurs when someone alters a check or creates a fake check using someone else’s account information.
Check kiting: Similar to paper hanging, this occurs when a check is written from an account without sufficient funds, but the amount is added to the account before deposit to cover the missing funds.
Counterfeiting: This occurs when someone creates a fake check that appears to be legitimate.
Stolen checks: This occurs when someone steals a check and alters the payee and/or amount before cashing or depositing it.
Check washing: the use of chemicals to remove the original ink on a check to replace the payee and/or the dollar amount. Fraudsters may also copy and print multiple washed checks for future use or to sell to third party criminals.
Tips to Prevent Check Fraud
Fill out check properly and completely
Use gel pens
Don't cash checks that you are not expecting
Reconcile your account promptly by verifying the dollar amount and payee that clears your account is the same that you wrote it out for.
Drop off checks at the post office instead of using your personal mailbox
Pay your bill online
Sign up for direct deposit through your employer
What to do in case of check fraud
Try to stop the payment - it may be too late, but contact your bank to see if they can block the money from reaching the scammer.
Report the fraud - notify the bank whose name is on the fraudulent check as well as file a complaint with the website or service where you noticed the scam.
Start a fraud alert - if you are concerned about your identity being stolen place a fraud alert on your credit reports by calling one of these credit bureaus.
