How to Deter Fraudsters Who Wash Checks

This post is part of a series sponsored by InsurBanc.

Not all financial fraud in today’s world is in the cybersecurity arena. Fraudsters are going old school and using a scheme known as “check washing.”

What is check washing?

Imagine your recently written check taking a “bath.” Mail snatchers erase the ink on a check with household cleaning products and then recycle the checks by rewriting them out to themselves. If the check amount, authorized signature and check number remain the same, the fraud is often discovered too late to remedy. Sometimes the check amount is also increased.

According to the 2021 Association for Financial Processionals Payment and Fraud Control Survey, bank checks account for 66% of payment method fraud, making them the most vulnerable payment method.

Ways to mitigate risk

Once of the most effective ways to reduce the risk of check fraud is to use electronic payment methods.

1. Use electronic means of payments for your agency, such as electronic bill pay or ACH in a secure environment.
2. Talk with your financial institution about fraud prevention systems such as Positive Pay, which compares checks presented against a check issue file and identifies checks that don’t match.

If you do issue checks:

1. Never leave blank spaces for payee or check amount.
2. Balance your bank statements, cross-checking payment details, as soon as you receive them.
3. Make sure blank and written checks are kept in a secure location.
4. Properly dispose of canceled checks.
5. Never leave checks in your mailbox for the postman to pick up.
6. Drop our checks off at the U.S. Post Office or a U.S. postal box close to pick-up time.

Check washing may be low-tech, but it can be very effective. Stay safe.

Topics Fraud