Fraud Basics

Checks continue to be an attractive vehicle for fraud

People might not be writing as many checks as they did in the past, but that hasn’t stopped fraudsters from pressing on with their schemes. The author examines why check fraud continues unabated even with the rise of noncash payment options.

In early 2023, the U.S. Financial Crimes Enforcement Network (FinCEN) issued an alert on a nationwide surge of mail-theft-related check fraud schemes in the U.S. Between March 2020 and February 2021, the U.S. Postal Inspection Service (USPIS) reported a 161% increase in mail theft complaints all while Bank Secrecy Act (BSA) reports of check fraud have also increased. In 2022 alone, more than 680,000 check fraud Suspicious Activity Reports (SARs) were filed with FinCEN. (See “FinCEN Alert on Nationwide Surge in Mail Theft-Related Check Fraud Schemes Targeting the U.S. Mail,” Feb. 27, 2023.)

It might be tempting to think that with all the new forms of noncash payment options available today, such as Zelle and Venmo, fraudsters would focus all their energies on those instead of low-tech paper checks. But as the FinCEN alert demonstrates, this isn’t the case. Many credit the COVID-19 pandemic and the circulation of government-relief checks through the mail as a major motivation for the surge in check fraud.

“To paraphrase an old saying, ‘don’t let a good crisis go to waste,’” Ken Smiley, a fraud mitigation expert for Amegy Bank, tells Fraud Magazine. “This sentiment was certainly adopted by criminal organizations during the pandemic and has long been a trend following other natural disasters or war. Criminals have been emboldened by the success of check fraud, so it has become a very organized crime process as a result.”

But there are other aspects to checks that keep fraud relevant even as fewer people are using them on a daily basis. It seems that for fraudsters, check fraud never really goes out of style. (See “Cases of check fraud escalate dramatically, with Americans warned not to mail checks if possible,” by Ken Sweet, Associated Press, June 12, 2023.) 

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