A Personal Lesson in Check Fraud Prevention

Check fraud feels like something from another era — an old-fashioned crime in a digital world. But after recently having a check stolen myself, I can say with certainty: it’s very real, disruptive, and costly.

In my case, a check I mailed never made it safely to its destination. Whether it was intercepted in transit through the United States Postal Service or compromised due to weak internal controls at the vendor’s office, the result was the same: someone used the information on the check to create their own fraudulent checks with my account’s information (referred to as check cooking) and attempted to benefit from funds that weren’t theirs.

Although banks and credit unions have fraud departments, based on my experience, they may not be as sophisticated as you would like to think they are. In my case they neglected to pick up the fact that one check was written for medical services delivered in a different state. It was also very obvious that the signature on the check was not my own and furthermore it was not even my name. The lack of security was disappointing.

Unfortunately, this type of theft is on the rise. Criminals have become increasingly sophisticated. Stolen checks are often “washed” — chemically treated to remove the original payee and amount — and then rewritten. Others are deposited through mobile banking apps before fraud is detected. Or as in my case, photo editing software and high-tech printers were used to manufacture fraudulent checks. Because checks contain sensitive information — your name, address, bank routing number, and account number — they offer thieves multiple avenues for exploitation.

Why Check Fraud Is So Disruptive

Unlike credit card fraud, which typically involves a quick freeze and reissue process, check fraud can be more complicated to resolve. Funds may leave your account before you notice. Automatic payments tied to that account can bounce. Vendors may not receive payment on time. And the administrative burden of filing affidavits, closing accounts, and opening new ones can take a lot of time to fully resolve.

Beyond the financial inconvenience, there’s also the unsettling feeling of vulnerability. A simple act — mailing a check or paying a vendor — can suddenly feel risky.

Practical Steps to Reduce Your Risk

While no method is foolproof, there are several proactive steps you can take to reduce your exposure:

1. Limit mailing checks when possible.
Consider secure electronic payment options such as ACH transfers or your bank’s online bill pay service.

2. If you must mail a check, hand it directly to a postal employee.
Avoid leaving outgoing mail in your home mailbox overnight or in unsecured drop boxes. This is particularly true nowadays when mail pickup and delivery can be rather sporadic.

3. Use permanent gel ink pens.
Gel ink is harder to chemically “wash” than standard ballpoint ink.

4. Monitor your bank accounts frequently.
Set up real-time alerts for withdrawals or checks clearing above a certain dollar amount.

5. Reconcile accounts promptly.
The faster you identify suspicious activity, the easier it is to work with your bank to contain the damage.

6. Evaluate vendor payment security.
If you regularly send checks to vendors, ask about their internal controls. How are incoming payments handled? Who has access? Are checks secured upon receipt?

7. Consider positive pay services.
Many banks offer fraud-prevention tools that match checks presented for payment against checks you’ve issued.

8. Consider freezing your credit reports.
I was fortunate that I had previously frozen my credit reports. If you have not already done so and you are not currently applying for any loans – I would recommend doing so as a precautionary step. It is very simple to turn this feature on and off as needed, so if you should experience check fraud, I would urge you to immediately freeze your account.

You can place a freeze online, by phone, or by mail. The freeze takes effect almost immediately online or by phone:

9. Create a list of all your vendors with auto payment and deposit.
With so many payments being made electronically/automatically, I would suggest you keep a running list of all the vendors that you have set up for either automatic payment or deposit. So, if something were to occur and you need to quickly make changes or reach out to them you have this as a handy resource.

A Final Thought

Check fraud may seem like an outdated threat, but it remains a significant risk for individuals and businesses alike. A single stolen check can trigger a cascade of complications. Taking preventative steps — even small ones — can dramatically reduce your exposure and provide peace of mind.

If my experience has reinforced anything, it’s this: vigilance matters. I was lucky that the recipient of the fraudulent check called to confirm that the check was good. Because it was an individual from out of state, the credit union immediately blocked the check and notified me of the issue. I closed the account that day. Although I had multiple overdraft charges – even including checks written on my behalf by the credit union on my closed account – that was probably the worst of it from a financial perspective. A couple hundred dollars in late fees and multiple hours of updating all my automatic payments and automatic withdrawals later I am finally in the clear.

Authored by John Davis, CFP®, President, Copper Leaf Financial

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Recipients should not act on the information presented without seeking prior professional advice. Additional guidance may be obtained by contacting Copper Leaf Financial.

This article was developed with the assistance of ChatGPT, an AI language model created by OpenAI.