What Is Check Fraud?

How Does Check Fraud Work?

Check fraud can work in different ways depending on the type of fraud. In some cases, the fraud takes place when someone knowingly writes a bad check—a check for more than the amount they have in their account. Other types of check fraud are more complex and involve criminals forging or altering checks to steal money.

Types of Check Fraud

Several types of check fraud are:

• Paper hanging: This means intentionally writing a bad check and taking advantage of the fact that it takes time for checks to clear—what's known as the "float." The check writer might receive the products or services they pay for with the check, and the recipient doesn't realize that the check will bounce until it's too late.
• Check kiting: There are several forms of check kiting, but they all involve writing bad checks and using multiple accounts. In some situations, the person might write a bad check from Bank A and then temporarily cover that amount by writing a bad check from Bank B and depositing it into Bank A. The kiting could continue until the person has enough real money to cover the amount. Or, criminals might write multiple bad checks and deposit them or use them to make credit card payments before "busting out" and withdrawing cash or using the card.
• Check washing: Criminals might steal a check from a USPS box, carrier or your mailbox and then wash the check with chemicals to keep the signature and erase the amount and payee―the recipient of the check. They then write in a new amount and address the check to themselves, an accomplice or a fraudulent identity they created and deposit the check into an account they control.
• Check cooking: Check cooking is similar to check washing, except the criminals scan the check and use software to alter it before printing a counterfeit check. Criminals might use it to get around some security measures that prevent check washing.
• Check theft and forgery: Rather than altering a stolen check, criminals might steal or print blank checks and then forge a signature.

How to Avoid Check Fraud

For starters, don't knowingly write a bad check—it's illegal and could lead to big fines and jail time. Even if you accidentally write a bad check, you could have to pay additional fees when the check bounces.

There are also companies that record consumers' history with check writing, checking accounts and savings accounts—similar to how Experian records your credit history. You might have trouble opening a checking account if your checks have bounced or you have an account with a negative balance.

Beyond watching your own check-writing activities, you'll need to protect yourself from scammers as well. Read on to find out how.

Protect Yourself From Check Washing and Cooking

To protect yourself from people stealing and using the checks you write, you can:

• Use different payment methods. Consider switching to a credit or debit card or peer-to-peer payment apps instead of sending checks. Many banks and credit unions also offer free online bill pay that you can use to pay your bills.
• Write checks with a black gel pen. Fraudsters might have trouble washing the ink of a check if you use certain types of pens. For instance, Uni-Ball claims its pens that have Super Ink can protect you from check fraud.
• Don't mail checks from home. If you mail a check, try to drop it off directly at the post office. Or, drop it in a mailbox that will be checked before the end of the day.
• Check your mail daily. Try to regularly check your mail to make sure no one steals a check or other mail from your box. You can use the free USPS Informed Delivery to get emails with images of your mail for the day.
• Hold your mail when you're away. You can also ask the USPS for a mail hold if you're going to be away for under 30 days.

You also might want to regularly monitor your account for unusual transactions if you're writing checks.

Protect Yourself From Fraudulent Checks

You also want to be aware of people who try to pay you with a fraudulent check. It can be a common tactic with certain types of scams, such as overpayment scams and employment scams.

The specifics can vary depending on the fraudster's angle. You might be trying to buy electronics, a puppy or a vehicle from an online marketplace. Or, you might see a posting for a job and even go through several rounds of interviews. But you'll know it's a scam when the person or company sends you a check for more than the intended amount.

They might claim they accidentally overpaid and ask you to deposit the check and send them back the extra. However, even if it looks like the check clears and the money is in your account, it's almost certainly a fraudulent check. A few days or weeks later, your bank might inform you that the check bounced. By then, the other person is long gone with the money you sent them.

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

Your next steps will depend on the type of check fraud.

• If someone stole and washed or cooked one of your checks: Contact your bank and file a police report. Fortunately, your bank will likely have to reimburse you for any lost funds. However, that might take weeks or months. If you're having trouble getting reimbursed, you can look up your bank's regulator on HelpWith MyBank.gov and file a complaint.
• If you sent someone money after depositing a fraudulent check: Scammers make a full-time job out of deceiving people, and some are very good at it. You can try reporting the fraud to whatever organization you used to send them money, and see if you can reverse the transaction. But if you sent the scammer cash, a gift card, cryptocurrency or a wire transfer, or it's been more than a few days since you sent them money via a different method, you might not be able to get your money back.

You can also report any check fraud to help organizations track fraud groups and protect others. The Federal Trade Commission runs ReportFraud.ftc.gov and the FBI has an Internet Crime Complaint Center.

Monitor Your Credit and Identity

Check fraud won't necessarily affect your credit. But criminals who steal checks from your mail or scam you into sending them money might also collect other personal information and try to steal your identity. Use a credit monitoring tool—Experian offers free credit monitoring —to get notified if someone applies for credit in your name. There are also identity protection programs, such as an Experian Premium membership, that monitor additional databases and can help you recover your identity.