What you can do to prevent check fraud

If you use paper checks and send them through the mail, it may be time to stop.

Check fraud linked to mail theft has surged across the country, according to a recent alert to banks from the Financial Crimes Enforcement Network, part of the Treasury Department.

The use of paper checks has been declining for decades, yet criminals have been increasingly targeting mailboxes to commit check fraud, the financial crimes network, known as FINCEN, said.

Last year, reports of check fraud filed by banks nearly doubled to 680,000, from 350,000 in 2021, according to FINCEN. The network said it issued the alert last month in collaboration with the U. S. Postal Inspection Service, the law enforcement arm of the post office. The service said it received more than 299,000 complaints of mail theft from March 2020 through February 2021, a 161% increase from a year earlier.

In one common approach known as “check washing,” detailed in the FINCEN alert, criminals steal signed checks from postal boxes, then use common chemicals like nail polish remover to remove the dollar amount and the name of the “payee,” or recipient. Then they rewrite the checks for a new recipient and a larger sum — often hundreds or thousands of dollars more — before cashing the check.

AARP, the advocacy group for older Americans, recently warned its members about check washing. Low- income, older consumers were more likely than other groups to pay with paper checks, the Federal Reserve Bank of Atlanta noted in 2020.

“It’s a big deal right now,” said David Maimon, a criminal justice professor and director of the evidencebased cybersecurity research group at Georgia State University in Atlanta.

C h e c k wa s h i n g , Maimon said, has evolved from small- time criminals pilfering a check or two from residential mailboxes to more organized efforts involving the theft of mail in bulk from postal collection boxes.

Criminals sell copies of washed checks online, he said, or stolen or counterfeit master keys, known as arrow keys, that allow access to Postal Service collection boxes. ( In some cases, postal carriers have been robbed at gunpoint for their keys; in others, postal employees are accused of stealing checks at sorting and distribution centers, FINCEN’S report said.) They then recruit others to loot collection boxes, act as check cashers ( often using fake IDS) or open accounts used for cashing doctored checks.

“It’s an elaborate supply chain,” said Maimon, whose researchers monitor sites on the dark web to track illegal activity, including check washing. Encrypted messaging apps make it easier for criminals to coordinate and share information, he said.

Lawrence Brandon was recently targeted for check fraud. In October, he recalled mailing a check for $ 57.50 for an insurance premium, he said in a phone interview. But his bank statement indicated that a check with that number had been paid in the amount of $ 4,950.

“I certainly don’t pay that kind of money, unless I know the person well,” said Brandon, who said he was an 80- year- old retired special- needs teacher in Philadelphia.

He reported the fraud to Citizens Bank and received a claim number in December, he said, but had not received the funds, forcing him to draw on savings to pay some expenses. A Citizens spokesperson said she couldn’t comment on a specific customer case, but she requested Brandon’s claim number so she could look into the situation.

Why is check fraud surging? Criminals who intercepted stimulus checks and other pandemic aid may have turned to new sources of revenue when those payments dried up, said Paul Benda, senior vice president of operational risk and cybersecurity at the American Bankers Association.

Also, “the mail system isn’t as secure as everyone thought it was,” he said.