The Impact of Personal Checking Fraud

The Impact of Personal Checking Fraud

Personal checking fraud is surprisingly common in today’s age of digital payments — according to the Financial Crimes Enforcement Network, check fraud is the largest source of illicit proceeds in the U.S. These scams can be damaging, but there are ways for consumers to protect themselves against losses. Here’s what to know about this type of fraud and tips for avoiding it.

How does personal checking fraud work?

Personal checking fraud happens when a criminal secures funds illegally through stolen checks or check information. Often, this happens when a fraudster intercepts a personal check through the mail. Scammers use stolen checks and other personal or financial information to commit fraud by accessing funds or rerouting payments.

Checking fraud can come in many forms, including:

• Forged signatures: A criminal uses a legitimate check with a fake signature to make a withdrawal or purchase.
• Check alterations: Changes are made to the amount being paid or withdrawn, or the person the check is made out to, on a stolen check.
• Identity theft: Information on a personal check like the victim’s name and account number is stolen to empty out their bank account, take out a loan or a similar scam.
• Card cracking: A criminal uses someone’s debit card to write a fraudulent check, then bleeds the victim’s account for as much as they can.

It’s important to understand these types of scams to look out for transactions you do not recognize or other issues. The sooner you can report suspected fraud, the more likely it is that those funds will be recovered.

The consequences of personal checking fraud

Any of these kinds of check fraud can impact an individual if they become a victim. And the consequences are serious: victims may experience financial losses, identity theft and/or damage to their credit score.

Additionally, anyone who deposits a fraudulent check — even unknowingly — could face the legal ramifications for lost funds. On top of that, experiencing fraud can have an impact on your mental health and may extend to other victims, such as local businesses.

Who are the main targets of personal checking fraud?

Any individual can be a target for personal checking fraud, but two main groups of victims tend to experience it more often.

First, seniors are an elevated category of victims. This demographic is more likely to use and mail personal checks rather than relying on credit cards or online and mobile banking. The U.S. Postal Service has warned Americans to stop mailing checks because of the risk of theft and fraud. The more checks someone uses, the more chances a scammer has to intercept the check and commit fraud.

That said, young people are another category that needs to be cognizant of these kinds of scams. Because younger generations are less used to paying for things or being paid through traditional checks, they may not understand the best ways to protect themselves. Young people also may think our growing reliance on digital banking methods means that nobody would bother stealing paper checks and using them for fraudulent purposes.

Despite the growing risk of fraud, there are things that everyone can do to protect their accounts from the consequences of personal check fraud.

What can I do to avoid these scams?

Monitoring your accounts regularly helps you spot any anomalies and take care of them quickly. Understanding the state of your finances isn’t only key in helping them grow and keeping them healthy: It can help you better identify a scam as it takes place. If you suspect any fraudulent activity on your account, call your bank right away.

Better security also means less ability for scammers to take advantage of your funds. Multi-factor authentication, strong passwords and keeping personal information secret are good ways to avoid fraud. When possible, opt to pay bills through more secure means than mailing a paper check.

 

Pro Tip: Using gel pens stops scammers from wiping your checks clean and writing their own information on your check.

The American Bankers Association has an entire site dedicated to helping consumers “practice safe checks” – it offers tips and additional information that may be helpful for those hoping to avoid check fraud.

The biggest thing with fraud to understand, though, is that the sooner you see and report it, the better chance you have of recovering any funds and mitigating any of its associated problems. Financial institutions take fraud seriously and are here to help you fight against it as best they can.

How can I report suspected fraud?

As soon as you suspect any fraud, report it immediately. You can contact your bank or financial institution to begin the process through a trusted phone number or online portal. Depending on what kind of fraud is happening, it’s important to keep in mind that identity fraud may be a component. Once you’ve reported fraudulent activity related to your accounts and finances, contact the authorities and credit reporting agencies to avoid any additional problems.

Protecting your finances

Fraud is, unfortunately, pervasive today. Just last year, Americans reported $10 billion stolen, and that may only be some of the total thanks to unreported incidents. Although sometimes it’s preferable or unavoidable to use paper checks rather than a different method of payment, it’s still possible to minimize your exposure to fraud, and to find ways to mitigate it in the event you find yourself a victim.

 

Our Learning Center offers helpful articles on fraud prevention and consumer protection. Check out additional resources here.