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J.R. Whalen: Here's Your Money Briefing for Wednesday, November 20th. I'm J.R. Whalen for the Wall Street Journal. Check fraud went up nearly 400% in the U.S. last year, and criminals are upping their game when targeting Americans who still write out paper checks and drop them in the mailbox.

Justin Baer: Stealing them has been a challenge that consumers and banks have had. And then what you have had is the emergence of social media and the ability to communicate and compare notes and teach one another different tricks of the trade to order to get this going again.

J.R. Whalen: We'll talk to WSJ's Justin Baer and Oyin Adedoyin about how fraudsters are cashing in after the break. Check fraud schemes are on the rise. The Wall Street Journal's Justin Baer and Oyin Adedoyin join me. Banking has become such a digital world. Oyin, how many people are still using paper checks?

Oyin Adedoyin: The U.S. relies on checks far more than many other countries. It has the highest per capita check usage in the world, with about 30 checks used per person annually, according to the Federal Reserve. The second highest is France, with about 16 checks per person. So you can really see how much checks are still a vital part of the U.S. economy. And in the U.S., check fraud went up nearly 400% last year.

J.R. Whalen: Justin, why has check fraud accelerated?

Justin Baer: A good place to start is what happened right after COVID where you had what was another strand of fraud going on as people identified opportunities to steal stimulus checks, to exploit the loan programs that were being extended to small businesses. All that was in a hope to stimulate the economy and recover from the virus. Eventually, those tricks and those processes ran dry, and so you had a group of people in search of a new thing and a new opportunity, and they ended up going back to the basics, so to speak. Checks have been around for a long time. Stealing them has been a challenge that consumers and banks have had for as long a time as that. And then what you have had is the emergence of social media and the ability to communicate and compare notes and teach one another different tricks of the trade in order to get this going again.

J.R. Whalen: Yeah, this really stunned me in your story, that when the fraudsters commit these crimes, they publicize their actions.

Oyin Adedoyin: Yeah, that's actually part of how they get away with this. So the issue is that there are mass volumes of fraudsters that are hitting multiple banks at a time. So they're in these channels on Telegram and basically sending photos of checks to each other, asking for access to Fidelity accounts or JPMorgan Chase accounts. And they're having these rapid amounts of communication with each other in real time, getting access to bank account information, and then depositing altered or fake checks into these accounts and moving that money as fast as possible.

J.R. Whalen: Take us through the footsteps of the fraudsters. How are they gaining access to people's bank accounts and their checks?

Justin Baer: There's two sides of that. With respect to the checks, it's every way imaginable. You could mail a check, put it in your mailbox, and someone steals it. You could be a recipient of, say, a check from the government and someone steals that. There could be an instance where someone has access to the blue mail drops outside of post offices and they open it up and they take all the checks.

J.R. Whalen: The fraudsters know where to find this stuff.

Justin Baer: They know where to find this stuff, and they know what to do with them no matter what those checks look like. So in some cases, it could be a blank check, which makes life easier for them, but what's called a washing process. They can remove the amount, they can remove the recipient of that check, and they can rewrite it and direct it to different places.

J.R. Whalen: But doesn't it take a couple of days for a check to clear. Would that slow down this process?

Justin Baer: It does. It depends though on where the check is coming from. There are rules in force that give banks and other financial institutions a limited time in which to make those funds available, and some of those funds are available immediately. Others might take a few days.

Oyin Adedoyin: Another thing that surprised us while we were reporting this story is how difficult it is sometimes for banks to investigate these cases of check fraud. I spoke with a woman who last year had a check that she had written to send to her sister stolen, and somebody had done exactly like Justin is describing. They had washed the check, put in a four in the place of a three, so they added $1,000 extra, and by the time that another family member of hers wanted to deposit a check that she had made for the same account, they were told that the check bounced, that there wasn't enough money in that account.

J.R. Whalen: There are so many safeguards in the financial world. What is allowing this to happen?

Justin Baer: A part of it are how good the fraudsters are at exploiting those weaknesses. There are issues that are specific to banks that they go through. There are the rules that are in place. There's also the difficulties that come with actually trying to track these folks down and, of course, trying to penalize them. And in a sense it is, in many respects, going to law enforcement with an instance of this is akin to going to the police station saying, "Hey, my bike was stolen," in a sense that, "I'm very sorry, sir, that happened, but what do you want us to do about it?" So banks have had to try to do a lot of the investigative work into this on their own, stack up these instances, and organize them in ways that give law enforcement something more to work with. But that takes time, it takes resources, and as we've seen on these social media platforms, there is strength in numbers. The more that attack a specific institution at the same time, the more likelihood that there are going to be fish that are not caught in the net.

J.R. Whalen: What are the banks doing to get ahead of this and protect consumers, get ahead of the moment that the fraudster breaches the line of security?

Justin Baer: The responses boil down to two of them. One is education. So they try to do more to explain to their customers what risks they take when they, for instance, put a check they've written in the mailbox and discourage them to the extent they can to use checks and to use online bill pay and digital payment systems and things like that, that can avoid that scenario. And the other side is deterrence. They have tried to dig in and present more cases to law enforcement. We saw the Chase civil lawsuits that they filed recently. That's difficult in a sense that there's just such a high volume of this level of activity right now. You haven't really seen signs that the perpetrators are either really slowing down or are no less brazen than they have been for much of the last year.

J.R. Whalen: For people who do write checks, what can they do to try to prevent being a victim of these types of things?

Oyin Adedoyin: There are a few things that they can do. It goes back to what Justin just mentioned, which is the education. So being aware that this is something that's happening, that this is an epidemic that's really sweeping the banking industry, and limiting the number of checks you write. Try to maybe only send checks to people that you know or maybe write smaller amount checks rather than huge amounts. It's also recommended that folks watch their bank accounts for unusual transactions. If something like this does happen, you want to catch it as soon as possible so that hopefully the bank or the police department can investigate it. So make sure you're regularly checking your bank account.
LINK: https://www.wsj.com/podcasts/y...-mine-for-scammers/5

I only have to use checks to mail in my rent. (A money order is possible, but they can be messed with too as well as costing a fee.) Sometimes I'll use them for other things, but that's only because I had to order a minimum of 200, and by golly, I'm gonna use 'em. When a check is intercepted in the mail or your checkbook gets lost or stolen, not only can they be altered, but out of necessity the financial institution's name, routing and account numbers are right on them.

I bank on line and use BillPay, but if the company or person I’m paying isn’t set up for ACH, the bank mails them a check. That process seems more secure because they debit my account for the exact amount immediately, and hold that money in reserve until it’s cashed. The bank knows what the amount should be, who the payee is, and the check is only valid for 90 days.

I got an in depth peek recently when our inept city government claimed tax payments I had made were reversed, but my bank had actually sent checks. A quick investigation revealed the City had never attempted to cash them, either during or after the 90 day window. When confronted with this information, the city was forced to admit their error.

quote:

I bank on line and use BillPay, but if the company or person I’m paying isn’t set up for ACH, the bank mails them a check. That process seems more secure because they debit my account for the exact amount immediately, and hold that money in reserve until it’s cashed. The bank knows what the amount should be, who the payee is, and the check is only valid for 90 days.

I started doing this for convenience, but now realize it's vastly more secure. Good to know that the bill-pay checks are handled differently by banks.

That leaves pretty much only birthday and Christmas checks for the kids; I'll talk to my wife about that but at least it falls under the category of known recipients, small amounts.

As far as credit card use is concerned, whenever possible I use Apple Pay which is more secure, the vendor doesn't see my CC number.

I do almost all my banking and payments through my banks online bill pay, so very few paper checks by me.
The few I do write are to the IRS and I can count those on one hand with a finger or two left over.
Since I've been doing that, more than a decade, I've had zero issues.

I've been using checks for over 35 years now. I still hand write all of my company checks.

Zero issues so far.

I used to put a check for my lawn guy in my home mail box. The amount was altered and cashed by someone else. The very few checks are now mailed at the post office in their inside box. I did get my money back but it took time and filling out of forms.

quote:

Originally posted by a1abdj:
I've been using checks for over 35 years now. I still hand write all of my company checks.

Zero issues so far.

Same here, still write and mail a lot of paper checks, maybe small town midwest is a bit safer.

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Originally posted by Calif Phil:

quote:

Originally posted by a1abdj:
I've been using checks for over 35 years now. I still hand write all of my company checks.

Zero issues so far.

Same here, still write and mail a lot of paper checks, maybe small town midwest is a bit safer.

Same here. 60 years for me with no problems.

My branch manager explained what was happening. A guy recruited a crew of homeless individuals to pull envelopes out of home mailboxes. He would alter the amount and the name and pocket the money.

I have moved as much of my banking online and away from paper and plastic. My brother recently had multiple problems that started with a check written out in person at the Delaware DMV; State Police refused to investigate unless my brother produced video of the person cashing the check! A woman I knew mailed checks from a mailbox in the Philadelphia area. She had checks stolen and "washed". Like my brother, she had to spend a lot of time and effort to clean up the mess. According to online postings, here in the Charleston area the theft of checks from the mail is rampant; the stolen checks are then "washed". I have what are called "Enhanced Security" checks which are very difficult to "wash" because of the embedded technology, whenever I have to use a check, I prefer to physically hand it to the tradesperson or contractor--in person. On rare occasion I will only mail a check when there is no other viable alternative and then only inside a post office.

"This specific area of fraud has gone up 4X in the past year, a continuing trend. Be careful continuing to expose yourself."

"Screw you, that doesn't mean there's any risk, my way has worked fine since 1681 and by golly nothing's gonna change. Those banks are out to getcha I say. And them thar paper checks somehow move through the entire financial system in paper form throughout."

I used checks sparingly over the last decade, mostly for bills and honestly for gun-related things where they're easier than money orders. About three years ago, my account was hit for about $3k in EFT fraud loading Visa gift cards. This happened due to info garnered off the front of a check that was mailed.

Luckily, I saw it happen real time....contacted my bank and they were able to retrieve the funds and give me a new account number. Sad, because I'd had that account number since 1984. I have no idea what my new account number is and have to look it up any time I need it and never re-ordered checks for the new account. 100% money orders now if not BillPay services.

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Originally posted by uvahawk:
State Police refused to investigate unless my brother produced video of the person cashing the check!

That's all you need to know about why this shit keeps happening. If ever the po po got a chunk of the recovered dough, they'd be all up on it!


As many of you have stated, the majority of this theft occurs out of mailboxes. That is the domain of USPS and we all know they're full of good and HONEST employees Fuck them guys too.

What's old is new again.

I prefer to write checks to using a credit card when paying in person. I use online payments much of the time, but I've paid several tradesmen with checks who've come to the house recently. Two furnaces, roof heat tape, plumber, tree surgeon.

Small businesses avoiding the 3% credit card processing fee is worth a lot to them.

quote:

Originally posted by jigray3:
I got an in depth peek recently when our inept city government claimed tax payments I had made were reversed, but my bank had actually sent checks. A quick investigation revealed the City had never attempted to cash them, either during or after the 90 day window. When confronted with this information, the city was forced to admit their error.

I'm curious how it turned out. Did you/the bank have to resend the checks?

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Originally posted by Fly-Sig:
What's old is new again.

I prefer to write checks to using a credit card when paying in person. I use online payments much of the time, but I've paid several tradesmen with checks who've come to the house recently. Two furnaces, roof heat tape, plumber, tree surgeon.

Small businesses avoiding the 3% credit card processing fee is worth a lot to them.

That's a good practice, esp. if they don't charge extra for taking the hit from their CC processor, very nice. Skilled contractors with honest pricing are worth their weight in gold, esp. these days with so few people entering the trades for so long now.

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Originally posted by PGT:
give me a new account number. Sad, because I'd had that account number since 1984. I have no idea what my new account number is and have to look it up any time I need it

I had the same account number since 1987 until I got hacked for the first time early this year.
I still pay a couple bills by check. I'll switch them to electronic but will never do the auto pay.

How the scam works-

Go unlocked car to unlocked car in the middle of the night. Steal cash, credit cards and firearms. Use cash and firearms as seed money.

Give credit card to random baby momma to rent car. Rental car company doesn’t care because they get their money from credit card company.

Use seed money to buy printers, check stock, and gas. Get on the interstate and start heading a couple city’s up.

Randomly start stealing mail from mailboxes of businesses. Manufacture or wash checks.

Find homeless dude at a shelter or community kitchen. He has to have an ID. Tell him you’ll give him $100 for every check he cashed. Buy him some decent clothes at Goodwill.

Make checks out in random amounts from $4500 to just shy of $5000. Go bank to bank and cash the washer checks that have been made out to homeless guy.

Make $30k-$40k per city and move on to the next city.

Local financial crimes detectives will eventually roll up the homeless guy.

Wash, rinse, repeat.

quote:

Originally posted by a1abdj:
I've been using checks for over 35 years now. I still hand write all of my company checks.

Zero issues so far.

Same here. My business check number starts with 27xxx.