If you're thinking about writing a check this holiday season, you may want to think again. While a convenient way to make a financial gift to a loved one, paper checks are also increasingly vulnerable to fraud. According to The New York Times, "banks and credit unions are expected to file nearly 540,000 suspicious activity reports tied to check fraud this year, a record, according to a Thomson Reuters analysis of data from FinCEN."
All of this suspicious activity has understandably put banks on high alert. This can mean that even if you're lucky enough to dodge the scammers, you may face difficulties such as a frozen or potentially shut down account as your bank works to suss out what's legitimate from what's fraudulent.
How does check fraud work?
There are a number of different types of check fraud, and they extend beyond just writing a bad check. Per U.S. Bank, "one of the most common tactics driving this rise in check fraud is mail theft." Once a fraudster swipes a check — whether from the mail or otherwise — they can commit check fraud in the following ways:
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- By changing the information on a check. Per U.S. Bank, a fraudster can use "common household chemicals to change the printed dollar amount and payee name on a check," a tactic also known as "check washing."
- By leveraging the information on a check to steal your identity. Checks contain a lot of information, and fraudsters can use that to their advantage. According to AARP, "bad actors can get enough information to open another bank account in your name," which they can then use to make ACH transfers from your bank account.
- By using a check's information to create more checks. As U.S. Bank explained, "by using the information on the stolen check, fraudsters may further exploit the victim's account information by creating additional counterfeit copies of the check."
How can you more safely use checks?
While the best way to avoid check fraud is to simply not write a paper check, there are some instances where you'll need to use one. In those cases, here are some tips to keep in mind to stay safe:
- Keep the number of checks you write to a minimum. "The simplest way to protect yourself is to keep the number of checks you write to a minimum," David Maimon, a professor at Georgia State University and the director of its Evidence-Based Cybersecurity Research Group, told The Wall Street Journal.
- Only send checks to people you know. According to Alicia Valentine, assistant vice president and cash-management officer at Florence Bank, "mailing a check to friends and family is usually safer than sending one to a stranger," the Journal reported.
- Use a gel ink pen to write checks. Per the Journal, "fraud specialists recommend opting for blue or black gel-ink pens and spelling everything out — from the name or title of the recipient to the dollar amount." Gel ink pens are superior to other types of pens due to their "chemical composition," which is "a little thicker than that used in a regular ballpoint pen, is permanent, and harder to remove," explained the Journal.
- Send checks from secure mailboxes. If you need to mail a check, don't do so from your house or a curbside USPS mailbox. Instead, "use the mailbox inside of a USPS facility," advised U.S. Bank.
- Keep frequent tabs on your bank account. "Get online regularly to scan your transactions for suspicious activity," recommended AARP, and also "make sure the amount that the check was cashed for matches the amount you wrote on it." You might also "turn on notifications for when withdrawals are made from your account so that you can be alerted via email or text every time that happens," suggested the Journal. If you see anything suspicious, report it immediately.
What are some safer alternatives to paper checks?
Feeling wary about paper checks but unsure of what to use instead? Here are some safer alternatives:
- Cash transfer apps, such as Zelle, PayPal, or Venmo
- Your bank or credit union's online bill pay service
- A credit card
- Over-the-phone payment
