With the growing prevalence and sophistication of digital scams, the latest development in financial crime is surprisingly analog. The U.S. Treasury Department says fraud involving paper checks has surged 385% since the pandemic, when government relief and unemployment checks became particularly attractive targets. Criminal activity has since expanded to include nearly all types of check-related fraud.
"If you still write a lot of checks, especially to pay bills through the mail, you might be at increased risk of becoming a victim," says Peter Campbell, director of Schwab's Financial Crimes Risk Management division.
With this scheme, fraudsters typically steal checks out of the mail and "wash" them, applying chemicals to remove the original payee and amount while preserving the signature to use the check for their own purposes.
Banks, law enforcement, and the postal service are all working to make paper checks more secure. In the meantime, here are three easy steps you can take to help ensure your check isn't involved in a scam:
- Use the right type of pen. Pigment-based (as opposed to dye-based) inks are harder to remove with readily available chemicals. Look for black or nonerasable gel ink, which soaks into the paper and is more difficult to remove than the ink from your typical ballpoint pen.
- Go to the post office. Don't leave outgoing checks in your curbside mailbox or other unsecured areas. Instead, drop them in a secure USPS collection box or the mail slot inside the post office.
- Monitor your payments. When you send checks, confirm they've arrived at their intended destination. If a check appears to have gone missing, contact your bank right away to request a stop payment order. If a forged check has cleared your account, quick action is even more critical: Report the fraud to your bank so it can investigate and credit the stolen funds back to you.
That said, your best defense may be to use paper checks only when there's no alternative. Most regular monthly payments can be paid online from your checking account without a fee. Likewise, individuals can increasingly be paid via Zelle® or other digital payment methods that use a unique email address, phone number, or username to identify the recipient.
"No payment method is completely without risk," Peter says, "but electronic payments may be a better choice."
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