What is Check Fraud?

October 25, 2023

In the 1980s, checks were the primary form of monetary exchange.1 However, the landscape has shifted with the emergence of rapid payment platforms like online banking, Venmo® and Zelle®, etc. causing checks to lose some of their prominence. Despite this decline, in 2022, 55% of Americans still relied on checks for their financial transactions.1 Checks continue to hold significance in the realm of financial transactions, and alongside this persistence, the threat of check fraud remains ever-present.

Check fraud may take various forms and may involve business or personal checks and even cashier checks and money orders or electronically delivered checks. It is important to understand what check fraud entails and learn how to spot the warning signs to protect yourself or your business effectively.

Understanding Check Fraud

Check fraud encompasses a range of illegal activities involving the manipulation of checks, typically aimed at extracting money from victims. Examples include:

  • Counterfeit Checks: Printing fake or fraudulent checks created to appear as if issued by a legitimate bank or financial institution.
  • Paperhanging: Writing bad checks with new or closed accounts to deceive recipients.
  • Check Kiting: Creating artificial balances between accounts to exploit processing delays.
  • Check Forgery: Falsifying signatures or endorsements for illicit gains.
  • Check Theft: Stealing checks or account information for fraudulent transactions.
  • Identity Check Theft: Using stolen personal information to open accounts and issue bad checks.
  • Chemical Alteration: Erasing and altering check information with chemicals.
  • Bad Checks for Purchases: Overpaying for goods, then disappearing, leaving victims with bad checks.
  • Money Order Fraud: Giving fake money orders and receiving checks in return, defrauding victims.

(Please note: these are not the only types of check fraud. These are the most common ones). Click the link below to learn more about other types of check fraud and how to report fraud.

Federal Trade Commission Consumer Advice

Preventing Check Fraud

  • Secure Your Checks: Store checks in a secure location, like a locked drawer or safe.
  • Use High-Security Checks: Opt for checks with advanced security features such as holograms, watermarks, and thermochromic ink. These features make it more challenging for fraudsters to alter or counterfeit your checks.
  • Shred Old Checks: Safely dispose of old checks to prevent unauthorized access.
  • Protect Your Mail: Use secure mailboxes to deter thieves. When mailing a check, use secure mailboxes or direct mailing at the post office to deter theft.
  • Implement Check Positive Pay Services: Detect check fraud, avoid losses and strengthen your business’ internal controls with Check Positive Pay. With Check Positive Pay, you can systematically compare checks presented on your account against the checks you issue daily. Click here to learn more about Positive Pay and how this service can digitally detect discrepancies.

Check fraud is a persistent threat, but by taking proactive steps to protect yourself and your finances, you can significantly reduce the risk.

For additional resources such as preventing and reporting fraud please visit our Security and Fraud Prevention Center.

Please note: The content in this article comes from individual opinions and experiences. The content should not be taken as advice coming from City National Bank of Florida. City National Bank of Florida does not offer tax, legal or accounting advice.


1 Yahoo! Finance, January 30, 2023

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