Protect Yourself from Check Fraud with These Prevention Tips

With roughly 700,000 check fraud cases per year in the U.S., check fraud is an increasingly common threat to both individuals and businesses. Like other financial scams, protecting yourself from check fraud can help you avoid falling victim to these schemes. So, what is check fraud, how does it work and how can you help prevent criminals from committing banking fraud on your accounts?

What is Check Fraud?

Check fraud refers to stealing money through the illegal use of checks. There are several common methods criminals may use to carry out this scam, from altering checks to forging and counterfeiting them.

• Check washing is when criminals use chemicals to wash away the ink from an existing check, then write in a new amount and address the check to a new recipient.
• Forged checks are typically legitimate checks with unauthorized signatures. For example, a criminal might steal a person’s checkbook and forge their signature. Checks can be falsified on either the front or the back of the check through a forged maker's signature or a forged endorsement.
• Counterfeit checks are fake checks that criminals produce by using software, printers and scanners.
• Check alteration is when criminals change information on a check, such as the name of the recipient, the payment amount or the date.

How Does Check Fraud Occur?

Check fraud can take many forms but financial scams like these often occur when bad actors alter checks by forging, washing or tampering with otherwise legitimate checks. Check washing typically follows a five-step process.

1. Thieves steal checks from mailboxes, residences or businesses.

2. They then use chemicals or household products, such as bleach, acetone or benzene, to remove the ink from the check.

3. If the chemical leaves a stain, the fraudsters may use another chemical to cover up the stains and restore the appearance of the check.

4. Next, they’ll write a new recipient name and amount on the check and, if necessary, alter the date or signature.

5. With a new check in hand, the criminals will attempt to deposit or cash the check. They’ll often use multiple different accounts, making it more difficult to track their activity.

One well-known check alteration scam occurred in July 2024 in Delray Beach, where a check-washing ring stole more than $1 million over two years. The scammers stole letters containing checks, then washed away the payee name and amount so they could replace them with different names and amounts.

Identifying Check Fraud

While banks and bank employees use technology for check verification, bogus checks can sometimes slip through the cracks. These fraud detection tips can help you secure your financial accounts and may help you identify a forged check.

• Unusual check numbers: Unusual check numbers – particularly those that are out of sequence – are a definite red flag when looking for phony checks. Duplicate check numbers and missing or unusual account or routing numbers may indicate that someone’s tampered with the check.
• Altered handwriting or ink: Scammers use a variety of techniques to tamper with checks, so any signs of alteration, such as stains, smears or discolorations, should be treated with suspicion.
• Missing or incorrect information: Checks contain many different pieces of information, from details about the bank, payer and payee. If you notice a check is missing the bank name, a check number, the date or any other information that typically appears on a check, it may be a sign of bank fraud.

How to Prevent Check Fraud

Both individuals and businesses can help improve their financial security and minimize the risk of check fraud by using these fraud prevention tips:

For Individuals

• Use security envelopes: Security envelopes conceal the contents of your envelopes, making it much more difficult for bad actors to know which envelopes contain checks.
• Keep checks in a secure place: Criminals can steal entire checkbooks, making it easy to commit check fraud. Storing your checks in a secure location – preferably one that’s locked – will help protect your financial information.
• Use permanent ink when writing checks: To combat check washing, use permanent ink (gel pens with dark ink are another option if permanent ink isn’t available). These inks can’t typically be washed away using household cleaners like bleach or nail polish remover.
• Monitor bank statements: Even if you get your statements online, you should monitor your account activity for anything unusual or suspicious.
• Take your mail directly to the post office: Thieves often target mailboxes and public drop boxes. If you’re mailing a check, drop it off inside the post office.
• Avoid adding personal information: Never write your Social Security number, driver’s license or any other personal or sensitive information on your checks.
• Steer clear of blank spaces: Blank spaces on checks can give criminals the opportunity to write in names or numbers. To avoid blank spaces and prevent check altering, you can draw a line through extra spaces.

For Businesses

• Implement secure banking practices: Secure banking practices are one of the best tools to protect your business. These include setting strong passwords for your online accounts, using two-factor authentication and making sure you never transact using public or unsecured Wi-Fi.
• Use electronic payments: One of the easiest ways to avoid falling victim to check fraud is to send payments electronically. This fast, secure, and convenient method of transferring money is a great alternative to writing and mailing physical checks. Seacoast’s Remote Deposit Capture makes it quick, simple and safe to deposit checks from anywhere.
• Reconcile accounts regularly: Account reconciliation is something every business should prioritize, both to balance the books and to help prevent fraud. By regularly reconciling debits and credits, businesses can quickly identify any discrepancies or inconsistencies and take immediate action.
• Add a layer of security with Positive Pay Solutions: The most secure financial institutions use technology to help fight check fraud, matching the details of the issued check to the deposited check to ensure the two match exactly. Seacoast’s Positive Pay Solutions automatically block unauthorized transactions to keep your money safe. With Payee Positive Pay customers will include the payee name information in the check register file. Checks information is compared to the file to confirm authenticity with these three pieces of information to match: Payee, Check Number and Amount. 

   

   

How to Report Check Fraud

If you suspect you’ve been the victim of financial fraud, it’s important to act quickly. Here’s how to report check fraud:

1. Contact your bank immediately to let them know your accounts may have been compromised. This is a crucial step not only in helping potentially catch criminals but also in maintaining your financial security.

2. File a police report.

3. Report possible cases of fraud to the Federal Trade Commission (FTC) and other relevant government authorities, such as the U.S. Postal Inspection Service or your state Attorney General.

4. Check your bank accounts and credit report for fraudulent transactions.

Early fraud detection can help you report financial crimes quickly, which is one of the keys to catching criminals, recovering stolen money, securing your accounts and preventing future cases of fraud.

The Role of Technology in Combating Check Fraud

Technology plays a pivotal role in combating bank fraud and other financial scams. Advances in fraud detection technology have helped stop criminals in their tracks and improve financial security for individuals and businesses alike. In recent years, the growth of machine learning (ML) and artificial intelligence (AI) has helped financial institutions detect check fraud. These algorithms and models establish and identify patterns across broad datasets, using predictive analytics to minimize fraud.

In addition to ML and AI, technology empowers secure banking and electronic payments, both of which combat check fraud. When you opt for electronic payments in a secure banking environment, you can fight check fraud with biometrics, two-factor authentication, SSL encryption and more.

We’re Here to Help

Though check fraud can happen to almost anyone, recognizing the signs of financial scams and acting quickly can help protect you. Despite the many security features used by banks, criminals may still find a way to alter, forge or counterfeit checks. That’s why it’s up to you to keep your checks in a safe place, use permanent ink and drop them directly at the post office. If you want an even more secure option, electronic payments can help protect your accounts thanks to advances in technology and multiple layers of security.

If you think you’ve been the victim of fraud, contact Seacoast Bank immediately or visit your local Seacoast branch.