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Fraudsters want your checks. Here's how to stop them

Frequent checkwriters have a greater chance of being defrauded.

This finding is based on J.P. Morgan analysis of Private Bank client accounts—and is consistent with a worldwide trend.

Last year, individuals and businesses across the Americas reported check fraud losses exceeding $21 billion—significantly more than in any other region of the world. It’s also more than credit card fraud in the region in 2023, according to a new industry report.1

It’s easy to understand why: Paper checks are a treasure trove of valuable personal and financial information—and should be closely guarded.

Understand the scope of the threat

If criminals gain access to your bank account and routing number, as well as your name, address and signature, and the transaction details you write in (vendor name, purchase), you would be vulnerable to a wide range of potential crimes:

  • Theft and forgery—Stolen paper checks can be fraudulently endorsed to withdraw funds from your account. Similarly, scammers can use information printed on your check to set up unauthorized automated clearing house (ACH) payments 
  • Counterfeiting—Scammers can create counterfeit checks using your account and routing numbers to withdraw funds or make payments
  • Check washing—Fraudsters can chemically remove the information written on your check and write in a new payee name and/or transaction amount 
  • Fake check schemes (check kiting)—Here, the aim is to trick you into depositing a check from a scammer. The scammer then explains it was sent in error and requests a full reimbursement or return of the funds equal to the so-called overpayment—but insists you use another repayment method, such as wire transfer, ACH or person-to-person transfer. Only later, after you return the funds, do you discover the initial check did not clear your bank because there were no funds in the scammer’s account. Before you return any funds, verify the legitimacy of the check you received by ensuring it has cleared the reputed sender’s account 

Check fraud can be difficult to spot

In the last few months alone, we’ve seen incidents like these: 

  • A client’s check to an attorney, stolen from a U.S. Postal Service mailbox, was chemically washed to change the payee and then rerouted to an unknown third party. The fraudster immediately cashed the $35,000 check and closed the account to which the funds were routed. It took the client several months to discover the loss.
  • A client selling artwork received a check from the buyer for $2,000 more than the asking price. Informed of the error, the buyer directed the seller to deposit the check and return the overpayment portion via a digital payment platform. The seller complied and shortly thereafter discovered there were insufficient funds in the buyer’s account to cover the purchase. The sale was voided and the painting remained in the seller’s possession. Unfortunately, the so-called overpayment of $2,000 could not be recovered. 

Take steps to protect yourself

Take advantage of these best practices to protect your financial transactions and keep sensitive information secure: 

  • Avoid putting sensitive personal information on your checks, such as your home address, Social Security number or phone number
  • Whenever possible, use digital payment methods, such as wire, ACH or credit card, instead of physical checks. If you must make a payment by check, mail it from inside the Post Office instead of an unattended street mailbox, where it can be stolen
  • Manage your accounts online:
    • Use J.P. Morgan’s online bill pay service, which sends checks on your behalf from the firm’s house account. This effectively masks your personal account information so it is not disclosed
    • Add advanced check fraud prevention services to your business and commercial checking accounts—speak to your J.P. Morgan team to learn more
    • Sign up for paperless statements to keep sensitive information away from unauthorized individuals
    • Enable online alerts. Receiving real-time activity reports can help you quickly spot unauthorized transactions
    • Regularly review your bank accounts for fraudulent transactions
  • When you order checks:
    • Purchase only from reputable companies 
    • Make sure checks are printed in high-security background colors (green, burgundy, blue, yellow and purple); are watermarked (to prevent counterfeiting); have chemical wash detection areas that show if information has been altered
    • Request check order deliveries be signed for; do not leave them outside unattended
    • Examine new orders to see if any checks are missing 
    • Shred all blank, unused or unwanted checks

Immediately contact your J.P. Morgan team if you suspect you are the victim of a check-related scam.

We can help

Your J.P. Morgan service team can provide you with additional information on how to protect your account and transactions from fraudsters.

 

1"Nasdaq 2024 Global Financial Crime Report,” NASDAQ Verafin, 2024.
The more checks you write, the greater the risk one will end up in a scammer’s hands. Take these steps to protect yourself from a fast-growing crime.

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