Protecting your organization from check fraud

Check fraud is surging nationwide, and financial institutions, businesses, and consumers are feeling the impact. Criminals are increasingly targeting the mail system, stealing checks, altering payee information, and draining accounts before victims even realize something is wrong. As fraud tactics evolve, organizations must strengthen their defenses to protect accountholders, reduce losses, and maintain trust.

This combined guide brings together the most important insights from SHAZAM’s fraud‑prevention experts — including how check fraud happens, why mail‑related schemes are rising, and the top steps your organization can take to stay ahead of criminals.

Why check fraud is rising

Fraudsters are exploiting vulnerabilities in the mail system and in outdated check‑handling processes. Here are some common tactics.

Mail theft

Criminals steal outgoing or incoming mail from mailboxes, postal carriers, or collection boxes. Checks are especially valuable because they contain account numbers, signatures, and personal information.

Check washing

Once a check is stolen, fraudsters use chemicals to remove the payee name and dollar amount. They then rewrite the check to a new payee — often themselves — and increase the amount.

Altered or counterfeit checks

Fraudsters may scan stolen checks, create duplicates, or alter key fields. These checks often look legitimate enough to pass initial inspection.

Social engineering schemes

Criminals may impersonate vendors, employees, or financial institutions to trick victims into sending checks or sharing sensitive information.

Staying ahead of evolving check fraud threats

Despite the increase in mail-related check fraud, there are steps you and your accountholders can take to help lower the risk.

Use secure mail options

Encourage accountholders and businesses to use secure USPS services such as in‑branch drop‑off, locked collection boxes, or certified mail. Outgoing mail should never sit in an unlocked mailbox overnight since fraudsters often target early‑morning and late‑night pickup times.

Switch to gel pens for check writing

Gel ink is harder to remove during check‑washing attempts, making checks more resistant to alteration.

Monitor accounts frequently

Daily account monitoring helps detect unauthorized transactions quickly, reducing losses and improving recovery chances.

Train employees to spot red flags

Staff should know how to identify suspicious checks, altered payee fields, mismatched handwriting, or unusual payment requests. By combining secure mailing practices, employee training, fraud‑prevention tools, and strong accountholder education, you can protect your organization and the people you serve.

Encourage electronic payments

In today’s world, mailing checks and/or disbursements opens your organization up to unnecessary risk. Digital payments, ACH transfers, and online bill pay reduce reliance on physical checks and eliminate the risk of mail theft.

Plus, you can save money. While the need for paper checks is shrinking, the cost is not. The 2022 AFP Payments Cost Benchmarking Survey determined that the median cost of issuing a paper check ranges from $2.01 to $4.00. while the average cost of an instant payment disbursement is around $1.

SHAZAM is your trusted connection into the U.S. payment system, enabling your organization to make safe and instant electronic payments. Learn more about how we can help transform your business with a more secure and streamlined payments process.

Beyond cost savings, electronic funds transfers offer safer and more efficient business operations.

SHAZAM, Inc. and ITS, Inc. provide this blog for general informational purposes only. Our blog may be shared by a direct link wherein the content remains as originally presented and has not been altered. SHAZAM, Inc. and ITS, Inc. assume no responsibility for errors or omissions in the contents on the blog. By using this blog, reader agrees that the information published does not constitute nor is a substitute for legal advice, which should only be sought from a qualified, licensed attorney.