Check fraud happens when a thief steals an account number to write fake checks in the account holder's name. Common check scams can happen to anyone and don't end with personal checks: Cashier's check scams are also prevalent.
In 2019, 74% of companies reported being victims of check fraud, according to a 2020 report by the Association for Financial Professionals.
To avoid these scams, you need to understand how check fraud happens and how to combat it by learning to spot fake personal, certified and cashier's checks.
Types of Check Scams
Checks have plenty of personal information right on the front, including your name, address, and account and routing numbers. Clerks or store owners may ask you to write your driver's license or Social Security number on the front, exposing your details even further.
It's important to know the different forms of check fraud to protect yourself from becoming a victim.
Here are some ways criminals can engage in scams involving checks:
- Online spending, selling and renting
- Account takeover
- Closed accounts
- Fake paychecks/overpayment
- Intentionally overdrawing
Here's a closer look at those fraud tactics.
1. Online Spending, Selling and Renting
When an online business allows you to pay for a product or service by check, all you need to provide is your bank's name and routing number along with your account number and billing address.
If someone gets access to your checking and personal information, they could make fraudulent purchases using your checking account.
2. Account Takeover
A thief who obtains your financial information can change the mailing addresses on your accounts to one they can access.
They can then empty your account before you even realize a cent is missing because the bank statements will no longer be delivered to your address.
3. Closed Accounts
Thieves who obtain a checkbook can write checks to unsuspecting merchants -- even if the account is closed. If they have enough of your information, they could reorder checks for that account.
You won't even realize what's going on; because the account is closed, you are no longer receiving statements that would indicate that someone is using your account fraudulently.
Check-kiting happens when a thief opens accounts at two or more banks to create fraudulent balances and take advantage of the time it takes for checks to clear.
Depositing a bad check falsely inflates the account balance temporarily, enabling the account holder to withdraw money against nonexistent funds.
Some fraudsters print checks using check-writing software. If a thief has your bank account and routing numbers, they might be able to print counterfeit checks using your information.
Counterfeiting isn't exclusive to personal or business checks. Unfortunately, criminals can also fabricate a cashier's check.
Check scams don't have to be complicated. A thief can simply steal a checkbook, forge the account holder's signature and write a check from that account.
7. Fake Paychecks/Overpayment
If someone informs you that you have won a prize or recruits you, or you see a posting online for a job that involves working from home or telecommuting, make sure it's legitimate.
In this scam, the fraudster will send you a fake check for more than the agreed-upon amount. They will direct you to cash it or deposit and withdraw the funds, keeping a portion for yourself and wiring a portion back to them.
8. Intentionally Overdrawing
You can use a check to pay for something even if your account doesn't actually have the funds necessary to cover it. But writing a check when you know you don't have the money to cover it is a dangerous, illegal practice.
Intentionally overdrawing is considered a type of fraud because you're obtaining the funds through false pretenses or representations. It can also lead to bounced checks, bank overdraft fees and other charges that can put your checking account and savings at risk.
How To Tell If a Check Is Fake
You can distinguish a fake check from a legitimate one by looking out for certain red flags. If you encounter some of these issues, you should do some research before depositing the check:
- The check lacks rough edges or perforations.
- The name is printed in a different font from your address or other information on the check.
- The address of the bank or the customer is missing.
- The watermark or security thread is missing in the back of the check.
- You received the check undeservedly.
- The check has stains or discolorations, possibly from a thief using altering chemicals.
Keep in mind that some errors can come up in the process of check writing, so the presence of one of these signs does not always indicate a bad check.
In addition to looking for security features such as watermarks and security threads, verify the following information on any personal check or cashier's check to make sure it's legitimate:
- Bank name, address and phone number, especially if it's from a foreign bank
- Names on the check -- ensure that all names are printed correctly and that the signature appears genuine
- Bank routing number and the payee's account number
- Date and amount
- The reason you got the check
- Overall accuracy -- any misspellings, typos or other inconsistencies can be signs of fraud
Here's a look at where you'll typically find the details on a personal check:
If you suspect you may have a fake check, don't cash it. Report it to the Federal Trade Commission, the U.S. Postal Inspection Service and your state protection agency, or ask your bank for help reporting the fraud. If you're concerned about the authenticity of a check you're dealing with, it's worth taking the time to look into possible fraud.
How To Protect Yourself Against Fake Check Scams
If you must write a check, exercise caution to prevent a fake check scam from happening to you.
Using a locked mailbox can help reduce your chance of being targeted and deter thieves from obtaining your information.
Take the following cautionary measures against check fraud if you still use checks:
- Write checks only to trustworthy individuals and companies.
- Mail your checks securely or deliver them in person.
- Use a gel pen to prevent check washing. Never use a pencil or erasable ink pen.
- Balance your checkbook and check your bank statements for fraud every month.
- Monitor your bank statements to ensure there aren't any charges that shouldn't be there.
- Store your checks in a safe location.
- Avoid writing checks to people you don't know or strangers you've just met.
- Cut down on the number of checks you're writing. Writing a check to pay your credit card bill is one thing; writing one to pay the cashier for your weekly groceries might be riskier.
What To Do If You're a Victim of Check Fraud
No matter how careful you are, clever thieves are out there trying to victimize you. If you become a victim of check fraud, do the following:
- Contact your bank immediately to report what happened.
- Cancel the check, money order or wire if it's not too late.
- Report it to the Federal Trade Commission, the National Association of Attorneys General and the FBI.
- Monitor your bank statements for irregularities.
Although there is no way to prevent fraud from being attempted, the best way to avoid check scams is to be alert and cautious.
This article has been updated with additional reporting since its original publication.
Our in-house research team and on-site financial experts work together to create content that's accurate, impartial and up to date. We fact-check every single statistic, quote and fact using trusted primary sources to make sure the information we provide is correct. You can learn more about GOBankingRates' processes and standards in our editorial policy.
- Association for Financial Professionals. "Payments Fraud And Control Survey Report - JP Morgan."
- Federal Trade Commission. "How to Spot, Avoid and Report Fake Check Scams | FTC ..."
- Federal Deposit Insurance Corp. "FDIC Consumer News: Beware of Fake Checks."
- Federal Deposit Insurance Corp. "FDIC Law, Regulations, Related Acts."
- Federal Deposit Insurance Corp. "10 Scams Targeting Bank Customers - FDIC."
- Office of the Comptroller of the Currency. "Counterfeit Cashier's Checks of Farmers & Merchants ..."