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Understanding and Preventing Check Fraud

Check fraud can take many forms, from writing bad checks to stealing and altering them. To safeguard yourself, it’s crucial to monitor your checking account closely and be vigilant if someone sends you a check. In this article, we’ll explore how check fraud works, the different types, how to avoid it, and what to do if you become a victim.

How Does Check Fraud Work?

Check fraud can occur in various ways. Sometimes, it involves knowingly writing a check for more than the available balance. Other times, it includes more sophisticated methods like forging or altering checks to steal money.

Types of Check Fraud

Several types of check fraud include:

Paper Hanging

This involves writing a bad check and exploiting the time it takes for checks to clear, known as the “float.” The recipient may not realize the check will bounce until it’s too late.

Check Kiting

Check kiting involves writing bad checks and using multiple accounts to cover the amounts temporarily. This can continue until the person has enough real money or decides to withdraw cash and disappear.

Check Washing

Criminals steal checks and use chemicals to erase the amount and payee, then rewrite the check to themselves or an accomplice.

Check Cooking

Similar to check washing, but involves scanning and altering the check using software before printing a counterfeit version.

Check Theft and Forgery

Criminals may steal or print blank checks and forge signatures to commit fraud.

How to Avoid Check Fraud

To protect yourself from check fraud, consider the following tips:

Use Different Payment Methods

Switch to credit or debit cards, or peer-to-peer payment apps instead of checks. Many banks offer free online bill pay services.

Write Checks with a Black Gel Pen

Using certain pens, like those with Super Ink, can make it harder for fraudsters to wash the ink off your checks.

Don’t Mail Checks from Home

Drop checks off directly at the post office or use a mailbox that will be checked before the end of the day.

Check Your Mail Daily

Regularly check your mail to ensure no one steals your checks or other important mail. Use USPS Informed Delivery to get images of your mail for the day.

Hold Your Mail When Away

If you’re going to be away, ask USPS to hold your mail for up to 30 days.

Protect Yourself from Fraudulent Checks

Be cautious of people trying to pay you with fraudulent checks, especially in overpayment or employment scams. If someone sends you a check for more than the intended amount and asks you to send back the extra, it’s likely a scam. Even if the check appears to clear, it may bounce later, leaving you out of pocket.

What to Do if You’re the Victim of Check Fraud

Your next steps depend on the type of check fraud:

If Your Check Was Stolen and Altered

Contact your bank and file a police report. Your bank will likely reimburse you, but it may take time. If you face issues, file a complaint with your bank’s regulator.

If You Sent Money After Depositing a Fraudulent Check

Report the fraud to the organization you used to send the money and see if you can reverse the transaction. If you sent cash, gift cards, cryptocurrency, or a wire transfer, or if too much time has passed, you might not recover your money.

Report check fraud to help organizations track fraud groups and protect others. The Federal Trade Commission and the FBI have resources for reporting fraud.

Monitor Your Credit and Identity

Check fraud may not directly affect your credit, but criminals could use your personal information for identity theft. Use a credit monitoring tool to get notified if someone applies for credit in your name. Identity protection programs can also help you recover your identity.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you with all your mortgage needs.

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