Everything old is new again. There was a time when my parents taught me to be extremely careful with personal checks — never to leave open space in the amount fields, lest someone add a zero, for example. Over the past several years, check writing has fallen deeply out of favor. In fact, check writing is down about 80% since 1990, thanks to online banking, automated payments, and so on. So you might think check fraud is down, too. It was, until recently.
I started hearing about a massive increase in old-fashioned check fraud from experts a year or so ago, and fresh data confirms that. The Treasury Department says check fraud doubled last year.
This is not your parents’ check-washing crimes, however. Organized gangs have combined online and offline tactics to make this a more lucrative, and more dangerous, crime wave. Criminals steal checks from the mail, “wash” them to change the payee and amount, then use money mules to deposit them. Sometimes called “walkers,” crime gangs are fond of using trustworthy-looking, older Americans to as money mules to make their deposits. Some are unwitting accomplices, some are in on the crime. In many cases, hacker partners learn all they can about bank accounts that are being attacked so the gangs can write checks specially crafted to fool a bank’s automated fraud detection tools.
To carry out these crimes on a large scale, the gangs need access to lots of checks. That’s why this new crime wave is particularly dangerous for mail carriers, who are being targeted by violent criminals looking to steal master keys for mailboxes and multi-unit dwellings. Reports of robberies of postal carriers have increased by nearly 78 percent in a year. Mail carriers, who feel vulnerable and exposed while walking alone on their routes, are demanding extra protection.
Here’s some more data on how bad check theft has become recently
FinCEN, the Financial Crimes Enforcement Network, operated by the US Treasury Department issued an alert a couple of months ago saying there was a surge in check fraud. Banks filed 680,000 reports of check fraud to FinCEN last year, up from just 350,000 reports in 2021. Meanwhile, the US Postal Inspection Service reported about 300,000 complaints of mail theft in 2021, more than double the prior year’s total according to the Associated Press.
Why the increase now? I recently interviewed David Maimon on The Perfect Scam — he is a professor at Georgia State University, and the Director of the Evidence-Based Cybersecurity Research Group. Here’s what he told me:
“We have strong reason to believe that the check washing increased during the last two years or so simply because criminals were able to get access to our checks by robbing mail carriers, opening USPS mailboxes, and stealing our mail,” he said. “This is, we believe, a major driver for what we’re seeing right now. I mean we have been collecting data during the last two years … We took this data we collected on a monthly basis, and we correlated it with data USPS released with respect to attacks against their mail carriers, and what we find is a very high and positive correlation between the volume of attacks happening against mail carrier in specific locations and the volume of checks, washed checks, forged checks, stolen checks that we find from those locations.”
Maimon and his team lurk in chat rooms where criminals buy and sell stolen checks, sometimes for tens of thousands of dollars. You can hear his horror stories on this episode of The Perfect Scam — click the play button below, or click here.
How can you protect yourself? Do something everyone should do anyway. Look carefully at your checking account, at least once a month, and if you spot any unusual activity, tell your bank’s fraud department immediately. Time is of the essence. Consumers can lose their ability to get a refund for failing to report fraud in a timely manner.
But here’s what’s really important to understand about check washing. You probably know it’s relatively easy to dispute charges and get your money back after a bout with credit or debit card fraud or even online bank hacking. Those situations are usually governed by federal regulations that are pretty consumer friendly. Victims must receive at least a provisional credit within 10 days, for example. With check fraud, things are not so simple. That’s governed by state laws. And while consumers are entitled to refunds in almost all cases, the investigations can involve multiple banks, can drag on for a long time, and refunds can take weeks or even months.
These delays are becoming more commonplace. In fact, the problem of delayed refunds for victims is so bad that in March a group of three US Senators wrote to the American Bankers Association urging banks to come up with a new plan for resolving check-washing fraud claims.
“Consumers should not be left waiting for their accounts to be made whole again,” the letter said. Meanwhile, while it’s not common, if the bank can argue that a consumer was negligent, say you lost your checkbook and didn’t report it promptly, well the bank can try to decline the refund.
In other words, you don’t want to get caught up in a check fraud case in the first place. So, my parents’ advice was right all along. Handle those checks with care.
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