Although check usage is declining, check fraud is increasing. Criminals are using the weaknesses in the financial system, targeting individuals and businesses with tactics designed to steal money. Understanding the various types of check fraud and learning how to protect yourself in today's financial environment is essential.
Check Fraud on the Rise in Wisconsin
In December 2022, the Outagamie County Sheriff's Office received multiple reports of mail theft. Fraudsters were stealing incoming and outgoing checks from business mailboxes—particularly on weekends—altering them, and fraudulently cashing them through mobile deposits or ATMs. In the Village of Greenville alone, losses exceeded $500,000. Unfortunately, similar scams continue to impact communities throughout the Fox Valley and Northeast Wisconsin.
These incidents emphasize the importance of safeguarding checks and remaining vigilant against fraudulent activities. If you suspect check fraud, please immediately contact Unison Credit Union's member service team.
Common Types of Check Fraud
Check fraud comes in many forms. Here are some of the most prevalent schemes affecting consumers and businesses today:
- Paperhanging: Writing checks from closed accounts or opening accounts specifically to issue bad checks.
- Check Kiting: Using two or more accounts to create an artificial balance, allowing fraudulent withdrawals before funds clear.
- Check Floating: Writing a check knowing there are insufficient funds, hoping to cover it before it clears.
- Check Forgery: Signing another person's name on a check to withdraw funds or make purchases.
- Check Theft & Counterfeiting: Stealing checks and altering information or creating fake checks with stolen account details.
- Identity Check Theft: Using stolen personal information to open accounts and write fraudulent checks.
- Account Takeover: Gaining unauthorized access to an account to draft fraudulent checks.
- Chemical Alteration (Washing): Using chemicals to erase check details and rewrite them for unauthorized transactions.
- Fake Paycheck Scams: Issuing fraudulent payroll checks to victims under false pretenses, often linked to job scams.
- Lottery & Overpayment Scams: Fraudsters send checks claiming the victim has won a lottery or overpaid for a purchase, only to request a refund before the check bounces.
- Money Order Fraud: Scammers issue fake money orders in exchange for real funds.
How to Protect Yourself from Check Fraud
To reduce the risk of check fraud, individuals and businesses should adopt the following security measures:
- Prioritize Secure Check Handling – Store checks securely, limit access, and use tamper-resistant checks with watermarks or security threads.
- Monitor Accounts Regularly – Monitor your transactions and report any suspicious activity immediately.
- Consider Digital Alternatives – Online payments and electronic transfers are generally more secure than paper checks.
- Educate Employees & Strengthen Controls – Businesses should train employees to recognize fraud risks and implement strong internal controls to prevent fraudulent transactions.
- Use Positive Pay Services – Businesses can work with their financial institutions to verify checks before processing payments.
What to Do If You're a Victim of Check Fraud
If you suspect or discover check fraud, act quickly to minimize financial damage:
- Contact Your Bank or Credit Union Immediately – Report the fraud to Unison Credit Union so we can help secure your accounts.
- File a Police Report – Notify your local law enforcement agency to document the fraud and aid investigations.
- Report to Federal Authorities – The Federal Trade Commission (FTC) and the FBI's Internet Crime Complaint Center (IC3) track and investigate fraud cases.
- Place Fraud Alerts on Your Accounts – Contact credit bureaus to prevent further unauthorized activity.
How Law Enforcement Is Combating Check Fraud
Law enforcement agencies are ramping up efforts to protect consumers and businesses. Key measures include:
- Enhanced Data Sharing – Agencies and financial institutions collaborate to track fraudulent activity.
- Improved Training – Law enforcement officers receive specialized training to identify and prevent check fraud.
- Public Awareness Campaigns – Efforts to educate the community on fraud risks and prevention strategies.
- Increased Surveillance & Prosecution – Authorities are cracking down on fraud rings and holding perpetrators accountable.
Stay Ahead of Fraud
Unison Credit Union protects our members from financial fraud. You can safeguard your finances against check fraud by staying informed and taking preventive measures. If you suspect any fraudulent activity on your account, please contact our member service team immediately. Together, we can combat fraud and ensure your financial future remains secure.