Writing a check may not be everyone’s chosen method of payment, but check fraud is still a risk to be aware of. Fraudsters can use stolen, altered, or counterfeit checks to access your money and personal information.
In some cases, a fraudulent check can look very legitimate, making it difficult to suspect any fraud at first glance. Knowing the common types of check fraud and recognizing the warning signs can help protect you and your finances. We’ll look at five of the most common types of check fraud, then learn ways you can protect yourself and your finances.
Mail Theft
Mail theft occurs when criminals steal checks from mailboxes or post office boxes. Stolen checks contain valuable personal and financial information, including your name, account number, and routing number. Because of this, criminals can use the information to alter the check, create counterfeit checks, attempt other fraudulent transactions, or try to gain access to your account.
Check Washing
Check washing usually starts with a stolen check. Criminals then use chemicals to remove the original ink, allowing them to change the check amount or the payee's name. While this doesn’t guarantee check washing won’t happen, it’s recommended to use a black or blue gel pen because it can make washing more difficult. Be sure to fill in all blank spaces on the payee and amount lines, so fraudsters cannot add extra numbers or names.
Counterfeit and Fake Check Scam
Fraudsters create counterfeit checks or use fraudulent checks as part of a scam. They may make a check appear legitimate by using real account and routing numbers. Victims are often told that they’ve received a payment for a job, won a prize, or received a check for an item they’re trying to sell. Once the victim receives the check and deposits it, they are asked to send some of the money back due to an overpayment. Once the money is sent back, the check bounces and comes back as fraudulent, leaving the victim at a financial loss.
Forged or Altered Checks
Forged or altered checks involve changing information on legitimate checks or creating a fraudulent check using someone else’s information. A criminal may forge the account holder’s signature, change the payee or dollar amount, alter the date, or make other changes to make the check still appear legitimate.
Check Kiting
Check kiting happens when someone uses the time it takes for checks to clear between financial institutions to make it appear that an account has more money available than it really does. A fraudster will write a bad check from an account with insufficient funds and deposit it into another account at a different financial institution. They’ll deposit the check, then withdraw the funds before either financial institution realizes the check is invalid or unpaid.
How to Protect Yourself
While it’s true that scammers are becoming more creative and check scams continue to be a common form of fraud, there are increasingly more ways to protect yourself and your finances. Protect your checks by storing them securely and avoid leaving outgoing checks in an unsecured mailbox. You may also consider dropping mail inside a post office or using electronic payments or direct deposit when available.
If you receive a check and question whether it seems legitimate, look for these potential red flags:
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Spelling errors or missing information
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Unusual stains, discoloration, or signs of alteration
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Unfamiliar handwriting or signatures
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Unusual fonts, spacing, or alignment of account information
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Unexpected checks or requests to send money back
If you’re ever unsure about a check, pause before depositing or using the funds. Steps you can take include contacting the financial institution the check is written from, speaking with your financial institution, and avoiding the use or transfer of funds from a suspicious check.
Check fraud can take several forms, from stolen checks and check washing to sophisticated fake check scams. Knowing what to look for, protecting your checks and financial information, and monitoring your accounts can help you spot suspicious activity early. If something doesn't look right, trust your instincts and contact your financial institution before acting.
At P1FCU, safer banking and the protection of our members from fraud are top priorities. Contact us with any questions you may have or if you believe you are a victim of financial fraud.
