Help Protect Your Business from the New Tactics in Check Fraud

February 2026

Check fraud has seen a significant resurgence in recent years, posing a substantial threat to businesses of all sizes. Check fraud is not a new phenomenon. The crime of stealing or counterfeiting paper checks to access funds directly from a victim’s bank account has been going on for decades. But recently, new techniques like check washing, organized criminal rings, and post office vulnerabilities have driven a major increase in reports of check fraud.

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The Cost of Check Fraud

Check fraud cost victims nearly $200 million in 2023.¹
More than $1 billion in washed and counterfeit checks were reported by the U.S. Postal Service (USPS) in 2024.²
Sophisticated operations have enlisted insider assistance at financial institutions or the USPS. In one case, federal prosecutors charged a USPS employee with stealing more than $1.6 million in checks from the U.S. mail, altering the checks, and depositing them into his own account.³

New Tactics in Check Fraud

Fraudsters have become increasingly sophisticated in their methods, with "check washing" being one of the most prevalent techniques.

How Check Washing Works

Erase Important Details. The fraudsters erase the payee name or check amount using common solvents like nail polish remover or household cleaning products.
Alter the Check. They rewrite the check with a new payee name and amount.
Cash the Check. They cash or deposit the altered check.

Postal Theft: A Growing Concern

Mail theft has surged, with criminals stealing checks from mailboxes and selling them on the dark web.
Postal carriers have been robbed, and in some cases, entire mail trucks have been stolen to obtain checks.
Stolen checks are often sold for a fraction of their value.

Writing Fake Checks from Real Accounts

Fraudsters can use phishing schemes and other methods to steal legitimate account and routing numbers to write fake checks, regardless of whether checks are typically written from the account.
Accounts that don’t write checks aren’t often monitored for check activity, so this type of fraud may go undetected. Dishonest employees can take advantage of their access to accounts where check activity is not being monitored.

Example of Writing Fake Checks

A business banking client discovers a fraudulent check posted to an account that was designed to be an “ACH only” account for which checks had not been issued. Because this is not a check-writing account, the client does not use bank tools to monitor check writing. Since the check is fraudulent, the bank quickly requests a force return of the payment. This situation shows how daily account review or use of automated tools such as KeyBank’s Check Block can help catch instances of check fraud.

Best Practices to Mitigate Check Fraud

Switch to Digital Payments. Eliminate paper checks by adopting digital payment platforms like ACH or wire transfers.
Use Bank Tools. Many banks offer tools such as Positive Pay, to verify check numbers and amounts; Payee Name Verification, to verify the payee's name; and Check Block Services, to prevent unauthorized checks from being processed. These tools are recommended even for accounts that don’t typically write checks.
Monitor Account Activity. Reconcile your accounts daily to quickly identify and report suspicious transactions.
Educate Employees. Train your staff on check fraud risks and secure payment practices to prevent vulnerabilities.

By understanding the evolving tactics used in check fraud and implementing these best practices, businesses may significantly reduce their exposure to this type of fraud.