What is check fraud?

Check fraud refers to any efforts to obtain money illegally using paper or digital checks. Counterfeit checks and altered checks are some of the most common check fraud schemes. Criminals either create and use a check that looks like it belongs to a company or organization, or the scammer has obtained a physical check that belongs to a company and has altered the information such as the amount or recipient name.

In some cases, criminals might steal checks from a business’ mailbox that they can alter and/or fraudulently cash. These mailbox thieves can either be working alone or in organized crime rings and in the process may commit identity theft or bank fraud. In addition to altering the checks, they can also use the information on the checks including the signature, account number, routing and transit numbers to create more counterfeit checks.

Preventing check fraud

Evaluate your internal processes and use the following tips to identify areas that you can improve upon. Are you reviewing bank statements or daily transaction activity to look for any irregularities? This can help your company identify fraud and potentially recover those funds. Make sure you are shredding sensitive papers such as bank statements, voided checks, pay stubs, credit card information, etc. Review hiring procedures – know your employees, consider surprise audits and make sure mailroom personnel and procedures are sound.

Never leave outgoing checks in unsupervised mailboxes and if possible, use a USPS Collection Box or drop checks off at the post office. Avoid using rubber bands to group your mail together. This makes it easier for a thief to grab multiple checks.

What to do if you suspect check fraud

  • Talk to someone you trust and contact your bank before you act.
  • Never accept a check as payment for more than your selling price.
  • Never send money back to someone who sent you a check.
  • Report suspected fraud to the Federal Trade Commission

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