What is check fraud?

Check fraud encompasses a number of criminal acts that entail the unlawful use of checks to illegally appropriate funds. Some of the most common cases of check fraud include forgery, counterfeiting and alteration, check kiting, and paperhanging.

Forgery involves forging the authorized signature on a check or physically stealing a check and then using or cashing it with the use of fraudulent identification cards.

Counterfeiting involves creating new checks or duplicates of a check with the use of advanced printing or publishing equipment.

Alteration involves using certain chemicals or solutions to make alterations on check information. Alterations can include removing or changing the payee name or the amount. Modifying only specific information on a check is called spot alteration, while erasing the entire information on a check is called check washing.

Check kiting involves opening separate checking accounts at different banks and writing fraudulent checks. Perpetrators who do this take advantage of the “float time” in banks to illegally create fraudulent account balances.

Paperhanging involves writing checks on closed or invalid bank accounts.

Check fraud is one of the major challenges faced by business and financial institutions today. Although the rapidly advancing technology has made it easier for criminals, whether as a group or as an individual, to develop new ways to employ the use of checks to illegally obtain funds from unsuspecting parties, it has also helped authorities detect fraud and safeguard against check fraud. Law enforcement and federal agencies as well as the business and financial groups and institutions work together to detect, investigate, and prosecute check fraud criminals.