Check Fraud is On the Rise

Even though are people using paper checks less often, there have been more reports of criminals stealing them from mailboxes and changing the dollar amount and recipient name. Check fraud linked to mail theft has surged across the country, according to a recent alert to banks from the Financial Enforcement Network, FinCEN, part of a division of the Treasury Department. Reports of check fraud filed by banks last year nearly doubled to 680,000, from 350,000 in 2021, according to FinCen. The U.S. Postal Inspection Service said it had received more than 299,000 complaints of mail theft from March 2020 through February 2021, a 161 percent increase from 2020.

The most common check fraud is “check washing”. Criminals steal signed checks from postal boxes, then use common chemicals like nail polish remover to remove the dollar amount and payee name. Then they rewrite the checks for a new payee and a larger sum, often hundreds or thousands of dollars more, before cashing the check. Check washing has evolved from small-time criminals stealing a check or two from residential mailboxes to more organized efforts involving the theft of mail in bulk from postal collection boxes. Ineffective management controls by the Postal Service, has led to increasing the risk that lost or stolen keys to unlock the postal boxes were not detected. The theft of mail puts personal checks as well as business checks, tax refunds and government benefits at risk.

First State Trust Company recommends that when sending payment requests, to provide the ACH Payment information so that the expense can be paid electronically instead of issuing a paper check. This will ensure that the payment is made timely and securely to the payee.

First State Trust Company acts a Trustee, Custodian and Paying Agent for Governmental Pension Plans, Defined Benefit and Defined Contribution Plans.

I can be contacted at 302-573-5972 or jrobinson@fs-trust.com for any questions.
James Robinson, Vice President/Trust Officer

The posts expressed are views of FSTC and are not intended as advice or recommendations. FSTC does not offer tax or legal advice, professional counsel should be sought for tax or legal advice. For informational purposes only.