Check Fraud, Security Federal, Chris Verenes and Mallory Holley

What was once a routine way to pay your bills — handwriting paper checks at the kitchen table, dropping envelopes into a blue metal box on the street — has become a high-risk endeavor: It provides the raw materials for low-level fraud artists and sophisticated crime rings, costing financial institutions billions. It has put banks on high alert, though their efforts to catch the fraud also routinely entangle innocent customers, causing institutions to suddenly freeze or shut down customer accounts in the process. Many of the bad guys manage to disappear without any consequences.

“Fraudsters go where the money is easiest,” said Chad Hetherington, a vice president at NICE Actimize, a financial crimes company specializing in fraud prevention.

Even as check use has rapidly declined over the past couple of decades, check fraud has risen sharply, particularly since the pandemic. The cons may start with stealing pieces of paper, but they leverage technology and social media to commit fraud on a grander scale, banking insiders and fraud experts said. In the past, criminals needed a special internet browser that would grant entry into the dark web marketplace of stolen checks, maybe even someone to vouch for them. Now all they need is an account from Telegram, a messaging app.

“You can buy checks on the internet for $45, with a perfectly good signature,” said John Ravita, director of business development at SQN Banking Systems, which provides check fraud detection software. “There is one website that offers a money-back guarantee. It’s like Nordstrom.”

A recent surge in mail theft caused the Financial Crimes Enforcement Network — an arm of the Treasury Department known as FinCEN that is charged with safeguarding the financial system — to sound alarm bells this year. Thieves have attacked mail carriers, or stolen and sold carriers’ arrow keys, which unlock mailboxes within a certain area. The checks are stolen from the mail, and then criminals carry out a classic fraud: “washing” the checks using something as basic as nail polish remover, leaving the signature untouched. Others “cook” new checks by scanning and altering the old ones.

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