Check Fraud is an Unrelenting Threat

August 23, 2024

Although advanced technology has introduced many ways to make payments and send money, not everyone has stopped writing checks, so check fraud continues. Writing checks is easy and creates a paper trail; however, if a check is lost or stolen and falls into the hands of a criminal, it can be altered or used to create counterfeit checks.

The following information may help you understand check fraud and help prevent it from happening to you.

Types of Check Fraud 

Altered Checks

A stolen check can be altered by using rubbing alcohol or another solution to dissolve or erase the ink and change the payee and/or the amount. The new payee can then transact that check by depositing it into their account or possibly cashing it at a bank location. A scammer can change the amount by adding zeroes and slightly altering the written verbiage. For example, a check payable for $18 could have extra zeroes added to read $1800.00, and they could write “hundred” after the word eighteen, changing the amount significantly.

Counterfeit Checks

Blank check stock can be purchased at an office supply store or printed using desktop publishing software. A stolen check can be used as a template for a counterfeit check, which is printed with valid checking information. 

Forged Checks

When a blank check is stolen, the fraudster often fills out the entire check and forges the account owner’s signature. If a criminal has access to a whole checkbook, they may steal just a few checks from it so that the theft is not immediately noticeable. 

How to Prevent Check Fraud

Electronic payments and fraud protection tools can help businesses and consumers minimize exposure to altered, forged, and counterfeit checks. Consider the following:

1. Use electronic payment methods such as ACH or real-time payment services. There are risks, so make sure the recipient is known to you. These transfers are almost immediate and final.
2. Send a wire transfer using instructions received from your vendor that have been verified with a known contact via phone. If changes are made to existing instructions for a recurring vendor, verify them before sending funds.
3. Online BillPay checks are more difficult to alter because the information is printed directly on the check and isn’t as easy to remove as ink from a ballpoint pen.
4. Utilize Positive Pay services. When a check is issued, the client submits details (e.g., amount and issue date) to the bank. When the check is presented for payment, the bank notifies the client of any exceptions or mismatches, and the client can make a same-day decision to pay or return the check.
5. Use online banking to review checks every morning. If a fraudulent check is caught immediately, it may be returned unpaid.