Watch Your Wallet
In 2023, you’d be forgiven for thinking the act of writing checks has become obsolete. But checks are very much still a thing, and so is their unfortunate side effect: check fraud.
The most common type of check fraud is called “check washing” — criminals steals checks, change the name, and attempt to cash it themselves. Check washing is perhaps best known as the scam perpetrated by Leonardo DiCaprio’s character in Catch Me If You Can.
But the reality is not as entertaining as Spielberg makes it seem. Today’s operations usually involve large, organized teams stealing millions of dollars from hundreds of victims.
Cashing Checks
Reports of both check fraud and mail theft have been skyrocketing over the past few years. Some believe the millions of stimulus checks sent out by the US government during the pandemic inspired criminals to begin washing checks again.
Whatever the case, banks reported roughly 680,000 counts of check fraud to the Financial Crimes Enforcement Network in 2022, a dramatic 94% increase from 2021. Additionally, complaints of mail theft were up to 300,000 in 2021, more than double from the year prior, according to the US Postal Inspection Service.
While payment has largely gone digital, many small businesses still rely on checks as a way of sending and receiving money, as do landlords, contractors, and real estate agents.
Avoiding Fraud
There are three main ways to avoid falling victim to check fraud.
The first is to use a digital payment source like PayPal (PYPL), Zelle, or an ACH transfer, as opposed to sending a physical check. If you must send a check, be sure to go to the post office in-person to send your mail. That way, fraudsters won’t be able to fish your check out of the US postal box.
Finally, if you run a business and cannot avoid sending checks regularly, consider signing up for “positive pay” services. These allow you to pre-authorize the information on your check, which curbs criminals’ ability to wash it. By taking just one of these steps, you can protect yourself from fraud — and hopefully play a part in discouraging check washing altogether.
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