What Is Check Fraud and How Does It Work?

Check fraud is when someone uses a check to steal money that isn't theirs, either by faking a check, altering one you wrote, or cashing one they stole from you. It is climbing fast, and the Treasury Department's FinCEN estimates check fraud caused about $21 billion in losses in 2023, with most of it now starting from checks stolen out of the mail.

You can lower your risk by writing every check with a black gel pen, since its pigment ink resists the chemicals thieves use to lift ink off the paper. Additionally, mail outgoing checks from inside a post office instead of leaving them in your home mailbox with the flag up. And finally, review your account online every few days, because reporting an unauthorized check quickly is what keeps your bank responsible for the refund instead of you.

Key Takeaways

• Check fraud takes several forms. The main types are forged, altered, counterfeit, and stolen checks, along with check kiting, and a single scheme often uses more than one.

• Altered checks are the most common. They make up

  about 44% of check fraud reports, usually made by washing a stolen check to change the payee and amount.

• Mail theft is driving the surge. Reports of theft from mail receptacles rose 139% between 2019 and 2023, feeding the stolen checks behind most fraud.

• Reporting fast protects your money. Your bank is generally liable for a forged check, but waiting past its reporting window can shift the loss to you.

• Most prevention is low-tech. Security ink, frequent account checks, and safe mailing stop the large majority of check fraud.

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What Is Check Fraud?

Check fraud is any scam that uses a paper check to take money from an account that isn't the fraudster's. It is one of the oldest money crimes, and it survives because people still write checks for big, routine payments like rent, business bills, and government benefits, which keeps a steady supply of checks moving through the mail.

Checks are easy to exploit because every one you write shows your name, your bank, and your account and routing numbers right on the front, which is often all a criminal needs to copy your check, drain your account, or open accounts in your name.

How Does Check Fraud Work?

Check fraud works by getting a real or fake check into a bank and pulling the money out before the bank confirms it's bad. A thief obtains one of your checks or the details to counterfeit one, deposits or cashes it, and withdraws the funds during the few days it takes the check to clear, before anyone notices.

Most of it begins with mail theft. Financial institutions filed more than 680,000 suspicious activity reports for check fraud in 2022, nearly double the year before, and much of that traces back to checks pulled from home mailboxes and USPS collection boxes.

What Are the Main Types of Check Fraud?

Check fraud shows up in several distinct forms, and organized rings often combine them. Here are the main types you are most likely to run into, from forged signatures to the account juggling known as kiting.

Forged Checks

A forged check is one signed by someone other than the account holder. A thief who steals your blank checks, or prints a check drawn on your account, signs your name and cashes it. Forged signatures make up roughly 20% of check fraud reports, and because your bank keeps your signature on file, it is usually responsible for paying one as long as you report it in time.

Altered Checks

An altered check is a real check you wrote that a thief has changed, usually the payee name or the dollar amount. It is the most common form of check fraud at about 44% of reports, and it is almost always done through check washing. Altered checks are hard to stop because the check is genuinely yours, so it can clear before you notice the numbers are wrong.

Check Washing

Check washing is the method behind most altered checks. A thief soaks a stolen check in common chemicals to erase the ink, then rewrites the payee and amount on the same real check. Because the paper and account details are legitimate, washed checks often clear without a second look. Check washing is a big enough topic to have its own guide, so this is only a short overview of how it feeds altered-check fraud.

Counterfeit Checks

A counterfeit check is a fake check printed to look real, often using account and routing numbers lifted from a genuine check or a data breach. Cheap printers and software make convincing fakes easy to produce. They show up constantly in scams where you are sent a check, told to deposit it, and asked to send part of the money back before the check bounces and the bank takes it all back from you.

Stolen Checks

Stolen checks are physical checks a thief takes, most often straight from the mail, then cashes, washes, or mines for your account details. Thieves target outgoing bill payments, tax refunds, and benefit checks. A stolen check is frequently just the first step, since it hands over everything needed for altered-check fraud or identity theft.

Check Kiting

Check kiting takes advantage of the delay between banks by writing checks between two or more accounts that don't hold enough money to cover them, creating a balance that isn't really there. The kiter deposits a bad check from one account into another and spends against it before the first check bounces. Unlike the other types, kiting is usually done by the account holder against the banks.

Who Is Liable for Check Fraud?

In most cases your bank is liable for check fraud, but that protection depends on you reporting it quickly. Under the Uniform Commercial Code, a bank generally has to put the money back if it pays a check over a forged signature, because it holds your signature on file and is expected to catch the mismatch.

Your protection expires if you wait too long. The UCC gives you up to a year to report a forged signature, but most bank deposit agreements shorten that to 30 or 60 days, and missing that window can leave you holding the loss, especially for repeat forgeries by the same person. This is the practical reason to check your accounts often rather than waiting for a monthly statement.

How Do You Protect Yourself From Check Fraud?

Most check fraud is stopped by controlling how thieves get your checks and how quickly you catch a problem.

• Write checks with security ink. Use a black gel pen with permanent pigment ink, which stands up to the chemicals used in check washing far better than a regular ballpoint.

• Check your account every few days. Reviewing activity online, rather than waiting for a paper statement, is what lets you report an unauthorized check inside your bank's deadline. A bank account with real-time alerts makes this easier.

• Mail checks from a safe spot. Drop outgoing checks inside a post office or a secure USPS box instead of your home mailbox with the flag up.

• Turn on account alerts. Set notifications for cleared checks and balance changes so fraud reaches you in real time.

• Lock up and shred. Store blank checks somewhere secure and shred old checks and statements instead of tossing them.

• Pay electronically when you can. Paying bills online or by card keeps the paper check out of the mail entirely.

• Use USPS Informed Delivery. This free service emails you images of incoming mail, so you will notice if a check you were expecting never shows up.

What Should You Do if Your Checks Are Compromised?

If you think your checks or account have been compromised, move fast, because how quickly you report it decides how much you can recover. Start with your bank, then document everything and file the right reports.

• Call your bank right away to flag the fraud, freeze or close the account, and get new checks and account numbers.

• Report mail theft to the Postal Inspection Service at uspis.gov or 1-877-876-2455 if a stolen check was involved.

• File a police report, which many banks and creditors require before they will process a fraud claim.

• Report identity theft at IdentityTheft.gov if your personal details were exposed.

• Watch your credit for new accounts opened in your name, which you can catch early with credit monitoring since stolen checks often lead to wider identity theft.

Key Terms to Know

• Check fraud. Any scheme that uses a paper check to take money from an account that isn't the fraudster's.

• Forged check. A check signed by someone who wasn't authorized to sign it.

• Altered check. A real check whose payee or amount has been changed, usually through check washing.

• Check washing. Erasing the ink on a real check with chemicals to rewrite the payee and amount.

• Counterfeit check. A fake check printed to imitate a real one, often using stolen account details.

• Check kiting. Moving money between accounts to exploit the delay between banks and create a balance that isn't really there.

• Uniform Commercial Code (UCC). The set of laws that decides who is liable when a fraudulent check is paid.

• Informed Delivery. A free USPS service that emails you images of mail on its way to you.

Frequently Asked Questions

What is the most common type of check fraud?

Altered checks are the most common type, at about 44% of check fraud reports. They are usually made by washing a stolen check, erasing the original ink and rewriting the payee and amount.

Who pays if a fraudulent check clears my account?

Your bank generally has to refund a check paid over a forged signature. That protection hinges on reporting the fraud quickly, though, since waiting past your deposit agreement's window can push the loss onto you.

How can I tell if a check is counterfeit?

Warning signs include a missing or dull security feature, edges that look too clean or lack perforations, mismatched fonts, and no bank contact details. When in doubt, call the issuing bank using a number you look up yourself rather than one printed on the check.

Can check fraud happen through mobile deposit?

Check fraud can absolutely happen through mobile deposit, and it is growing. Someone with a stolen or counterfeit check can deposit it remotely from a phone, which is another reason to review your account activity often.

How do I keep my checks from being washed?

Write checks with a black gel pen using permanent pigment ink, which resists the chemicals used in washing. Mailing from a secure location and checking your account frequently add further protection.

Sources

• Financial Crimes Enforcement Network: Alert on Nationwide Surge in Mail Theft-Related Check Fraud

• Forbes: From Mailbox to Bank Fraud: Check Theft Is Surging

• NFP: Check Fraud Still on the Rise

• Consumer Financial Protection Bureau: I think I was a victim of a fake check scam. What should I do?

• Federal Trade Commission: How To Spot, Avoid, and Report Fake Check Scams

• Legal Information Institute, Cornell Law School: U.C.C. § 4-406