95% Rise in Mail Theft-Related Check Fraud – Now Is the Time To Modernize!

Once one of the most common ways to make a payment, paying by check, and certainly mailing a check, has been largely replaced by different forms of electronic payment methods.

However, people do still use checks, and people also still mail them. Criminals are taking advantage of this–in fact, the strategy is on the rise (reference). Organized crime is making it necessary for individuals and small businesses to refine how they use mail altogether – especially the safety measures they have in place around sending checks. Mail theft-related check fraud is the largest source of illicit proceeds in the United States.

Let’s look at how to improve your personal and business safety around payment and avoid check fraud.

Why is Check Fraud a Problem?

Well, for starters, the statistics tell us so. In 2022, banks reported 680,000 instances of check fraud, according to the Financial Crimes Enforcement Network (FinCEN), a massive increase from 350,000 in 2021. As for the postal service, reports of mail theft doubled in 2021, with 300,000 complaints. Yikes!

Much of the increase we’ve seen was fueled by an unusual phenomenon: relief checks during the pandemic. Suddenly, almost every U.S. household was receiving money in the mail in the form of checks, and criminals knew it. 

Criminals will generally steal all types of checks in the U.S. Mail as part of a mail theft scheme, but business checks may be more valuable because business accounts are often well-funded and it may take longer for the victim to notice the fraud. There have been cases of Postal Service employees stealing checks at USPS sorting and distribution facilities.

With no readily perfect solution, U.S. government officials have warned Americans to avoid mailing checks whenever possible. If you have to mail a check, try to use a secure mail drop inside a post office rather than a standalone mailbox at a corner or outside a store.

The Answer to Check Fraud 

While there is no good answer to check fraud, there are  alternative solutions that many Americans are using: online payments.

Despite the technology boom, check use is far from dead, with Americans still writing 3.4 billion checks in 2022. While a massive decrease from 1990, it’s still clear many Americans rely on checks to make and receive payments.

Many small businesses especially still rely on checks, even with other options available. With a growing number of fraud cases, it is wise for small businesses to consider online payment solutions. Options such as ACH, Zelle, Venmo, Cash App, PayPal, and even Quickbooks Online Payment processing offer small businesses the ability to accept online payments safely. 

While some banks will reimburse customers if they are victims of check fraud, due to the rising problem, refunds have decreased in recent months. Small businesses are advised to take the problem into their own hands.

PK Tech’s Take

In servicing many small and medium-sized businesses, we are attuned to the many operational hazards small businesses face. We highly recommend that our clients use electronic payment methods, such as ACH, in order to reduce losses, labor costs, fees, and to automate the payment process. 

You should know that sending and receiving money via ACH still has its risks. Typically, you have five banking days to notice fraud and reverse the transaction. However, we highly recommend all businesses using ACH speak to their bank and turn on ACH filtering (or ACH debit blocking). ACH filters act as a barrier against unauthorized withdrawals from your account and in our experience, are not turned on by default without speaking to your bank. 

We hope this information was of value to you. Please reach out if you have any questions.