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The Return of Check Fraud

How to Protect Your Business

Despite the slow and steady decline over the years in the use of written checks and increase toward more digital transactions – the financial sector has seen an uptick in check fraud.

According to the Federal Reserve, check fraud has become increasingly popular among criminals, resulting in billions in losses per year — more than twice what it was five years ago. And FinCEN, the Financial Crimes Enforcement Network, reported 680,000 instances of known check fraud in 2022, and those trends continued into 2023, with experts estimating a whopping $24 billion in losses.

Why has check fraud increased, and what can you do to prevent it? This article explores the problem and how proactive measures can help.

What’s Happening
Thieves often scour postal boxes and mailboxes looking to steal personal checks, business checks, tax refund checks, and checks related to government programs like social security and unemployment benefits. Once they have the check in hand, criminals may employ a variety of methods to steal your money, such as:

  • Washing the check with chemicals to erase the amount and payee while keeping the original signature.
  • Endorsing the back of the check with a signature that doesn’t match the payee and then depositing the check electronically.
  • Using the routing and account number to create counterfeit checks from blank checks as well as signer information to initiate fraudulent ACH transactions.

Regardless of the method, the criminal’s goal is always the same — to get money.

How to Reduce Your Risk of Check Fraud
While VeraBank implements many measures to help spot check fraud, you must too be proactive to help prevent it from striking. That’s why we offer Positive Pay – a FREE fraud prevention solution available to our business customers who are enrolled in Online Banking. Yes, you read that right, it’s available at absolutely no cost to you!

How Positive Pay Works
Our Positive Pay service is a powerful automated fraud detection tool for checks and ACH items while empowering your business to play a lead role in determining if a transaction is legitimate or fraudulent. One of the primary benefits of using Positive Pay is that fraudulent transactions can be rejected immediately, preventing funds from leaving an account.

We offer two types of Positive Pay – Check Positive Pay and ACH Positive Pay.

Check Positive Pay vs. ACH Positive Pay
With Check Positive Pay, the goal is to prevent check fraud by matching the checks you issue as a company with those presented for payment. If a check is considered suspicious, you are notified to review the check and determine if it should be paid. Check Payee Positive Pay takes it a step further and also reviews the payee's name on the checks to determine in addition to the other information on the check (dollar amount and check number). Check Payee Positive Pay is an excellent tool to use against common check fraud occurring more and more every day including check washing or the creation of fraudulent checks.

ACH Positive Pay allows you to monitor ACH debits posting to your account. You can make decisions about those ACH transactions, reducing the risk of potential fraud.

All in all, check fraud continues to pose a threat to businesses and protection requires vigilance, education, and proactive measures. Using safeguards like our no cost Positive Pay service can help block bad actors from accessing your funds.

Want to learn more? Talk with a Business Banking Specialist or explore other ways our business banking services can support your operations.

For more on how to protect yourself and you finances, check out our fraud resources.

Have questions about scams? Please let us know.

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