Check fraud is on the rise again. The U.S. Postal Service just alerted financial institutions that check fraud DOUBLED from 2021 to 2022.
Individuals are most at risk for seeing their bank accounts ransacked and identities compromised, but the thieves are putting businesses that rely on the mail to make payments and get paid at financial risk. “Business checks may be more valuable because business accounts are often well-funded and it may take longer for the victim to notice the fraud,” warns the Financial Crimes Enforcement Network (FinCEN).
Mail theft of checks is sometimes done by postal employees but “is increasingly committed by … individual fraudsters to organized criminal groups comprised of the organizers of the criminal scheme, recruiters, check washers and money mules.”
FinCEN reports “financial institutions filed over 350,000 Suspicious Activity Reports (SARs) to FinCEN to report potential check fraud, a 23% increase [over 2020]. This upward trend continued into 2022, when the number of SARs related to check fraud reached over 680,000, nearly double” the reported SARs in 2021.
Red flags for check fraud
Banks and other lending institutions should look out for:
- non-characteristic large withdrawals on a customer’s account via check to a new payee
- complaints that a check they mailed was never received by the intended recipient
- a suspect check reveals faded handwriting underneath darker handwriting, giving the appearance of overwriting, or
- a check received from a regular customer appears to feel or look different than previous checks.
One way businesses are looking to reduce fraud is by increasing use of automated payables, typically using payment cards. Getting vendors to agree to automation can be a challenge but pays off in spades for companies that make the switch. Click here for a related story.
In the meantime, remind your Accounts Receivable and Accounts Payable staffers to keep tabs on any incoming or outgoing check payments. Delays in payment should be followed up on, with the caveat that the postal service is spotty to slow in many parts of the country due to years of budget cuts.
If your company suspects check fraud, go to https://www.uspis.gov/report.
