With the growing prevalence and sophistication of digital scams, one of the top financial crimes reported by depository institutions the last five years is surprisingly analog. According to the U.S. Treasury Department, fraud involving paper checks surged 240% between 2020 and 2024, in large part due to when government relief and unemployment checks became particularly attractive targets during the pandemic. 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.
What is check fraud?
Scammers employ many types of check fraud to gain access to goods and funds without the account holder's knowledge, typically by using counterfeit checks or altering legitimate checks. One such scheme is known as check washing, where fraudsters 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 altered check for their own purposes.
Check fraud prevention
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 clears your bank account, quick action is even more critical: Report the fraud to your financial institution 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."
Check fraud checklist
If you're a victim of a check fraud scheme, the scammer may have access not only to your account number but also other personal information. Here are some extra steps you can take to protect against identity theft.
- Immediately report the fraud or identity theft to your financial institution and follow any instructions they provide regarding your account.
- Contact the fraud department of your creditors, such as credit card issuers, phone companies, utilities, banks, and lenders to dispute unauthorized charges.
- Report the crime to your local police, who will file a formal report and refer you to additional resources and agencies that can help.
- Contact the three major credit bureaus—Equifax, Experian, and TransUnion—to request a fraud alert on your account and a freeze on your credit report.
- Visit the Federal Trade Commission's IdentityTheft.gov to report identity theft and get a personal recovery plan.
Most importantly, continue to monitor all of your accounts for suspicious activity and follow best practices for securing your information.
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