The Return of Check Fraud and How to Protect Yourself
Although technological advancements have led to a decline in check use in recent years, financial institutions are experiencing a recent uptick in check fraud.
FinCEN reported 680,000 instances of known check fraud in 2022, and those trends continued into 2023 and 2024.
What does check fraud look like?
Check fraud is the use and manipulation of traditional checks to fraudulently obtain funds from a bank account.
Types of Check Fraud:
Altered Checks
Altered checks are original checks that have been physically altered, modified, or effaced in some manner. An altered check often has a valid signature, but the payee, or dollar amount have been modified.
Check Negotiated with a Forged Endorsement
Checks negotiated with a forged endorsement are checks clearing a bank account with a fraudulent payee signature in the endorsement section on the back of a check. Alternatively, the fraudster might forge the endorsement by signing their own name and depositing the item into their own bank account.
Counterfeit Checks
Counterfeit checks have been created fraudulently with the purpose of stealing money. A counterfeit check is on that replaces the genuine authorized check in its entirety, with a fake alternative.
Protect Against Check Fraud
Sign up for Positive Pay
Positive Pay is a fraud prevention tool product that Mission Bank offers its customers to help detect fraudulent checks by cross-referencing checks presented for payment with checks issued by the client, utilizing a predetermined set of parameters.
Sign up for ACH Origination
ACH Origination allows you to electronically pay or debit other businesses or individuals, thereby minimizing the number of physical checks your company writes. This is especially helpful and secure for businesses that need to process large volumes of payables for payroll and vendor payments.
Protect Your Mail
- Retrieve your mail promptly after delivery. Don't leave mail in your mailbox overnight.
- If you're leaving town, ask the Post Office to hold your mail.
- Contact the sender if you don't receive mail you are expecting.
- Consider security envelopes to conceal contents of your mail.
Protect Your Checks:
- Use pens with permanent black ink to make it more difficult for criminals to wash your checks
- Don't leave any blank spaces in the payee or amount lines.
- Leave out personal details such as social security numbers, credit card information, driver's license information, etc.
- Review you paid checks to ensure that the endorsement information is correct
- Consider electronic alternatives to writing checks such as ACH origination.
- Follow up with payees to confirm receipt of mailed checks.