The dodo bird, the passenger pigeon, the woolly mammoth, T Rex. These long-extinct creatures may soon be joined by – the paper check.
Check usage has declined for decades as Americans have mainly switched to paying for goods and services with credit and debit cards. If you are a member of one of the alphabet generations, you might not even know what a paper check is.
But that hasn't stopped criminals from reaching inside your mailbox and helping themselves. According to the New York Times, last year, reports of check fraud filed by banks nearly doubled to 680,000, from 350,000 in 2021, according to FinCEN, the Financial Crimes Network.
The network issued an alert last month in collaboration with the U.S. Postal Inspection Service, the law enforcement arm of the post office. The service said it received more than 299,000 complaints of mail theft from March 2020 through February 2021, a 161 percent increase from a year earlier.
Criminals typically steal personal checks, business checks, tax refund checks, and checks related to government assistance programs, such as Social Security payments and unemployment benefits. Then they use common chemicals like nail polish remover to remove the dollar amount and the name of the "payee," or recipient. The process is known as check washing. Then they rewrite the checks for a new recipient and a more considerable sum — often hundreds or thousands of dollars more — before cashing the check.
But it doesn't end there. Criminals may also steal the recipient's identity or, in the case of a business check, create a fake business with a similar name, then open a bank account in that name.
How can this be prevented?
If you still pay bills with paper checks, experts say you should not put them in your mailbox with the flag up. Walk them into your post office.
If you are a business owner, go digital. Some banks offer services that ensure no checks are written on behalf of your business without your consent. Products like Check Positive Pay work by notifying companies of checks presented that don't match the issue information.
Businesses can go a step further and implement Payee Positive Pay, giving businesses the ability to detect fraud before it hits their account. The system identifies the check and account numbers, the payee's name on each check, along with the dollar amount, against checks previously authorized and issued by you. The check will not go through if these components don't match.
With fraud schemes rapidly evolving, business owners must continually educate themselves and their employees on ways to protect themselves and the business. The right banking partner can help you create a fraud protection plan for your business and keep you updated on the latest type of schemes they are seeing.
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