How to Avoid Check Fraud: Protection Tips

Check fraud involves the illegal use of checks to acquire funds or property, often through counterfeiting, alteration, or forgery. These deceptive practices can also include “paper hanging,” where fraudulent checks are written with no intention of covering the balance. Preventing check fraud is important for individuals and businesses alike, as scammers employ sophisticated methods. Financial institutions across the United States reported over $1.3 billion in losses from check fraud in 2023 alone, underscoring its growing threat.

Safeguarding Your Checks

Protecting physical checks and related information is a step in preventing check fraud. Blank checks should always be kept in a locked, secure location to prevent unauthorized access. This practice minimizes the risk of checks being stolen and used for fraudulent purposes.

Order new checks from reputable financial institutions or trusted providers. Avoiding third-party vendors or unknown sources reduces the chance of receiving compromised checks or having your account information intercepted.

Proper disposal of check-related documents is equally important. Voided, old, or unused checks, along with bank statements and other documents containing account details, should be thoroughly shredded before discarding. Cross-cut shredders render information unreadable; professional shredding services can also be utilized for larger quantities. This prevents fraudsters from retrieving sensitive data from discarded materials.

Mail security also plays a role in safeguarding checks. Retrieve incoming mail promptly to prevent theft from mailboxes. Avoid leaving outgoing mail, especially checks, in unsecured residential mailboxes with flags raised, as this can deter criminals who target mail for fraud. Using secure mail slots at post offices or handing mail directly to a carrier offers greater protection.

Secure Transaction Practices

Implementing secure practices when writing, sending, and receiving checks reduces fraud risks during transactions. When writing a check, always use permanent ink, such as a gel pen, to prevent alterations. All fields, including the date, payee name, and amount in both figures and words, should be filled completely without leaving large gaps or blank spaces that could be modified. Consistent signatures help banks verify authenticity, and writing “For Deposit Only” on the back of checks being received can restrict their use to a specific account.

Sending checks requires careful attention to security. Use secure mailboxes, such as those inside a post office, or deliver checks in person when feasible, for better protection than leaving them in residential mailboxes. Verifying the recipient’s exact address minimizes the chance of misdelivery, which could expose the check to unauthorized individuals. Disguising the check within the envelope by folding it inside another piece of paper can also deter mail theft.

Receiving checks also demands vigilance to avoid common scams. Be cautious of overpayment scams, where a check is received for an amount greater than owed, with a request to refund the difference. The fraudulent check may eventually bounce, leaving the victim responsible for the refunded amount. Before depositing or acting on large or unexpected checks, verify their legitimacy by contacting the issuing bank directly, using a phone number obtained from an independent source rather than from the check itself.

Monitoring and Digital Protection

Continuous monitoring of financial accounts and securing digital access points are important for detecting and preventing check fraud. Regularly reviewing bank statements and online transaction histories allows for prompt identification of unauthorized activity. Many financial institutions offer transaction alerts, which can notify account holders of large withdrawals, checks clearing, or other suspicious account movements, providing an early warning system. Promptly reconciling accounts ensures that all transactions are legitimate and accounted for.

Maintaining strong digital security practices further protects banking information. This includes using strong, unique passwords for online banking accounts, combining various character types and lengths. Enabling multi-factor authentication (MFA) adds a layer of security by requiring a second verification method beyond a password, such as a code sent to a phone or a biometric scan. Exercise caution with phishing attempts, which try to trick individuals into revealing login credentials, and ensure secure Wi-Fi connections when accessing banking apps.

Identity protection services offer broader safeguards that can indirectly help prevent check fraud. These services often monitor for the misuse of personal information, including bank account details, which could be exploited for fraudulent check schemes. While credit monitoring primarily alerts users to suspicious activity on credit reports, some identity protection programs extend their vigilance to financial accounts and other data points. This proactive approach helps detect potential threats before they result in significant financial loss.