How Your Business Can Avoid the Nationwide Surge in Mail Theft-Related Check Fraud

Bob Cerminaro

October 18, 2023

The United States Postal Service (USPS) delivers nearly 130 billion pieces of U.S. mail every year to 160 million homes and businesses in the United States. As thieves have figured out, many of those deliveries include personal checks, business checks, tax refunds and checks related to government assistance such as Social Security payments and unemployment checks. 

Although fewer people and businesses write checks, the incidence of check fraud is way up. Since October is Cybersecurity month, it is the perfect time to sharpen our focus on protecting our accounts from fraud.

According to an alert sent out earlier this year by the U.S. Treasury Financial Crimes Enforcement Network (FinCEN), there have been successive surges in mail theft yearly since the COVID pandemic. In 2022, reports of check fraud doubled from the previous year to 680,000. 

The report states that checks from business accounts may be considered more valuable since business accounts are often well-funded giving thieves, potentially, a bigger payday.

There are safeguards available, which I'll mention in a moment.

But first, it is important to know how thieves are using these checks. As the FinCEN alert outlines, fraudsters and organized criminal groups alter or "wash" the checks and replace the payee information you intended with the thieves' fraudulent identity. During the check-washing process fraudsters will also increase the dollar amount on the check - sometimes by thousands of dollars. In other cases, an entirely new set of checks is created using your company's routing and account numbers.

Check Payment Safety

For solutions, business owners should consider services such as Check Positive Pay1, which most major banks make available to business customers. This service ensures that before a check is paid from your account, the dollar amount, the check number and other details match precisely to what you intended. Anything else is flagged as potentially fraudulent, saving you from an unauthorized payment.

Increase Online Payments

Are you taking advantage of opportunities to reduce the number of checks your business writes? If your company pays vendors with a paper check, see what options are available to pay the vendor electronically, through an ETF (electronic funds transfer) or even a company credit card. Paying employees through direct deposit also reduces the number of paper checks your company issues. 

Accepting Online Payments

Speaking of online payments, does your business allow customers to pay you online? Online payments accelerate payments into your account and eliminate staff needing to process those checks manually. Consumers have embraced the idea of immediate payment options using a credit or debit card or Automatic Clearing House (ACH) payment2. Most major banks can help business owners accept online payments through programs such as eZePay, which provides a secure system for online payment.

Consumers can also benefit from taking some simple precautions. Seek online payment options for reoccurring payments such as utility bills, insurance premiums, mortgage and rent payments, HOA dues, and credit card payments. For those situations where a check is the only way to make payment, many suggest using a pen with blue or black non-erasable gel ink, which soaks into the paper and is difficult to remove in the check-washing process. When mailing a check payment from home, avoid using the privately owned cluster box units at apartment complexes, planned neighborhoods and high-density commercial buildings and take it to the post office instead. 

bob cerminaro, ceo, bank of nevadaBob Cerminaro is division CEO of Bank of Nevada and First Independent Bank, divisions of Western Alliance Bank, Member FDIC. Cerminaro has nearly 30 years of banking experience serving in a variety of senior-level commercial, corporate and investment banking leadership roles.

1. Requires enrollment in Business Online Banking. Refer to disclosures provided at account opening, the Business Schedule of Fees, and Pro Forma for additional information.
2. All offers of credit are subject to credit approval. This functionality is based on the National Automated Clearinghouse Association (NACHA) 2017 rule adopting Same Day ACH Origination Solution as amended in 2020. Requires enrollment in Business Online Banking. Some products and services may be subject to prior approval or fees. Refer to disclosures provided at account opening, the Business Schedule of Fees, and Pro Forma for additional information.