December 15, 2023

The Check Isn’t In the Mail

The Check Isn’t In the Mail

The latest cybersecurity threat isn’t happening online. It involves paper checks. This year has apparently been a record-breaker when it comes to check fraud, according to the latest data from the Financial Crimes Enforcement Network that’s making its way through the headlines.

The problem has become so much of a headache that the American Bankers Association has been teaming up with the U.S. Postal Service and law enforcement to nip it in the bud. Incidents more than tripled from 2018 to 2022, with fraudsters continually branching out to new schemes, like stealing envelopes containing paper checks out of mailboxes and creating fraudulent checks using Photoshop. Even worse, some of the crooks are employees at the U.S. Postal Service. Regardless, once they get ahold of someone’s account information, it’s easy for them to take over the entire account and create a world of pain for whoever is trying to undo the damage. I know this firsthand. It happens to us at Marcum multiple times a year. Whether it’s my personal account or one of the many business entities I sign checks for, we have attempts to pass fraudulent checks with our account numbers more times a year than I care to admit.

Many younger people didn’t grow up with checks and don’t use them. They probably don’t understand what all of the fuss is about. They may not even know how to write checks, as some of you can probably attest. But a substantial portion of the population still does write checks, if only as a gift to tuck into a greeting card or a payment to a doctor’s office that prefers them. This new push to prevent check fraud could bring the era of checks to an end, except among die-hard fans. Some banks are encountering substantial losses.

Most of our clients now use electronic payments, but that depends on the industry. And even some electronic pay methods still wind up sending an actual check. Some industries still rely heavily on paper checks, and so do the companies within them. If you’re among them, it’s a good time to review your payment procedures to make sure that you’re protecting yourself from check-related fraud. For our clients who still need to make the transition, we are strongly advising them to work with our tech team to batten down the hatches and transition to digital payments. Digital payments aren’t without fraud, either, but right now, they’re considered safer.

Fraud is a big, global industry, and fraudsters never run out of ideas for making money. But fortunately, it looks like there’s one opponent they haven’t banked on: AI. Banks are saying that AI can detect fraud better than humans in many cases, and they’re starting to put it to work for them. That effort may not root out fraud, but at least it will make it a little less convenient.

On another note, Hanukkah, the Jewish Festival of Lights, ends today. To those who observe, Happy Hanukkah.