When we say the words “check fraud,” I bet you think to yourself, “How often does that actually happen?” or “Well that won’t happen to me, will it?” The truth is that while paper checks may seem old fashioned, check fraud is still on trend with rising numbers every year. In fact, the banking world saw an 84% increase in check fraud cases over recent years! So while it may seem shocking, check fraud can happen to anyone – especially if you’re unprepared to defend yourself from the latest check fraud schemes. To keep yourself protected in 2024, we suggest brushing up on how to best navigate check fraud from detection to prevention.

How does physical check fraud work?

For many people, their mail is usually delivered to one of these common places – a home mailbox, apartment building mailroom, or official blue postal box. Unfortunately, any of these locations can be a target for criminals and if any paper checks are left sitting in these mailboxes, they may be vulnerable to check washing. Check washing is one of the most common forms of check fraud and is often committed when a criminal steals a check, erases the payee information and amount using a chemical process or even photoshop, and replaces that information with their own to cash the new check under a false identity. However, this isn’t the only way that a criminal can use your information to commit check fraud. A new form of check washing occurs when criminals create their own counterfeit checks using your real account number and then deposit them under a false identity.

Why might it be difficult to catch fraudsters while they’re trying to cash these fake checks? Well check washing isn’t always a one-man operation; it can consist of a whole organization of criminals from those who create the counterfeit checks to those who act as “brokers” and organize “walkers” to cash the checks in person. Walkers act as the physical embodiment of the false identity that’s been created and can provide a combination of both false and real personal information to open a bank account on the criminal’s behalf. As a result, this elaborate operation can prevent authorities from tracing the account to a specific person and also make it harder for banks to flag the account as unusual, particularly if the criminals create a pattern of large deposits and transactions over time.

How does digital check fraud work?

In the era of social media, criminals have been given a host of new opportunities to hide behind anonymous usernames and secure messaging apps to connect with one another, form organizations for check fraud schemes, and even search for victims.

Aside from traditional check washing, scammers have found that another way to pull off a check fraud scheme is by connecting with potential victims on social media and luring them in with false promises ranging from products and services to job opportunities. Once a victim is emotionally invested in the opportunity that a scammer is presenting, they will be sent a check or pictures of a check that they can then deposit into their account – and this is where the scheme truly comes into play. The scammer will then ask the victim to send a portion of the check money back to them through apps like PayPal, Venmo, or Cash App by claiming that they need the money for a variety of reasons such as training supplies, service fees, etc. But that check that was originally sent? It’s no more than a fake, meaning it will never clear and the victim has just lost the money they sent through a payment app without a way to make up for it. To make matters worse, scammers may also ask for the victim’s sensitive financial information, such as his or her online banking login, account number, or PIN, which they can then use to commit further fraud.

How to keep yourself safe

While it may sound scary to know that there’s more than one way you could be targeted for check fraud, just knowing about the latest schemes has already put you on the path to prevention. Remember the saying, “Knowledge is power?” The first step to keeping yourself safe from scammers is by learning about their common tactics so you can recognize the red flags when you come across them. Of course, there are plenty of other ways to protect against check fraud as well, both digitally and physically:

  • Rather than mailing a check or receiving a check through the mail, consider using an alternative payment method such as ACH or wire transfer.
  • If you are going to mail a check, be sure to drop it off in an official blue collection box before the last scheduled pick-up or, better yet, hand it directly to a postal worker at the post office.
  • If you’re expecting to receive a check or other payment information in the mail, try your best to collect it as soon as its delivered or arrange to have the post office hold onto your mail until you can pick it up yourself.
  • Consider opting into Positive Pay if your financial institution offers it, so you can be alerted of suspicious checks and be able to stop them before they go through.
  • Think about switching to e-statements, this way you can eliminate the possibility of scammers finding your financial records and account information in your mailbox.
  • Be cautious of any unsolicited texts, emails, or social media messages from strangers. Remember that if an offer sounds too good to be true, there’s a good chance it is. When in doubt, it’s best not to engage and to delete the message instead.
  • Never share your sensitive personal or financial information with anyone, both online and in-person.
  • Think twice before sending money to someone who you don’t know – especially if the person claims to be a potential employer. Real employers will not ask you for money or banking information if you haven’t even been hired yet.

What to do if you get scammed

 Everyone makes mistakes, and scammers prey on your vulnerabilities to appear very convincing. If you find that you’ve fallen victim to a check fraud scheme, don’t panic just yet. Here are the best practices you can follow to put a stop to check fraud once it’s started:

  • Report the incident to your financial institution so they can close your compromised account and help keep you safe from further financial loss.
  • If you’ve been digitally targeted by a scammer, report their user to the social media platform you were messaged on. In addition, you can report the user to the payment app that they requested you send money through.
  • Depending on the situation, you may need to notify local law enforcement as well and file a police report of your loss.
  • You can always report scams to the federal government through the website IC3.gov or FTC.gov so that authorities can better track check fraud trends and help with potential prosecution efforts.