Check Fraud: What It Is and How to Prevent It

Check fraud and check scams are becoming increasingly sophisticated and it's essential to stay informed about the risks associated to know how to protect yourself. BMI FCU wants to provide our members information on what check fraud is, how to prevent it, and the steps to take if you suspect you've been a victim. 

What is Check Fraud?

Check fraud involves the unlawful use of checks to deceive and steal money from individuals, businesses, or financial institutions. Fraudsters often employ various methods to carry out these schemes:

  • Counterfeit Checks: Fraudsters create fake checks that look like legitimate ones issued by a bank or credit union. These checks are used to withdraw funds from an unsuspecting victim's account.
    Forged Endorsements: A common tactic where a scammer signs a check that isn’t theirs, allowing them to cash or deposit it without the account holder's knowledge.
  • Check Alteration: After obtaining a legitimate check, scammers modify the details—such as the payee’s name or amount—before depositing it into their account.
  • Overpayment Scams: A fraudster sends a check to a victim for an amount exceeding what's owed, asking the victim to deposit it and send the excess back. Once the check bounces, the victim is out the wired money.
  • Check Kiting: Scammers open a financial account, then begin writing checks for non-existent funds from the account. After writing the check, the scammer will deposit it into a separate bank account and withdraw the available funds before the check bounces. Once caught, the scammer will be held responsible to pay back amounts owed.

How to Prevent Check Fraud

As a member of BMI Federal Credit Union, we want to help you take proactive steps to protect yourself from check fraud. Here are some essential prevention tips:

  • Stay Vigilant with Your Checks: Only write checks to trusted individuals and businesses. When writing a check, always use a permanent ink pen and fill out every field clearly to prevent alterations. Avoid placing checks in mailboxes or mail collection bins overnight.
  • Monitor Your Account Regularly: Regularly review your account statements and Online Banking for unauthorized transactions. Early detection is key to preventing significant losses. Set up alerts to notify you of large transactions or any unusual activity.
  • Shred Sensitive Information: Dispose of old checks and bank statements properly by shredding them. Fraudsters often go through trash to find checks or account information they can use to commit fraud.
  • Avoid Overpayment Schemes: If someone sends you a check for more than what you are owed and asks you to send back the difference, it is likely a scam. Wait for the check to fully clear before considering any action and contact us immediately if something feels off.
  • Use Secure Banking Options: Whenever possible, opt for electronic payments over checks. Online Banking offers secure methods to transfer.

How to Report Check Fraud

If you suspect that you are a victim of check fraud or notice any irregularities in your account, it's crucial to act quickly:

  • Contact Us Immediately: Notify BMI FCU as soon as you suspect fraudulent activity. We can investigate the issue and help prevent further losses.
  • Report to the Federal Trade Commission (FTC): The FTC collects information on fraud and can provide resources to help you recover. Visit the FTC’s website to file a report.
  • Consider a Fraud Alert or Credit Freeze: If your checks have been stolen or you believe your finances have been compromised, consider placing a fraud alert or freeze on your credit report through major credit bureaus.

Check fraud is a serious concern that requires vigilance from everyone involved. As your trusted financial partner, we are committed to helping you protect your finances by providing the knowledge and tools you need to stay safe. If you have any questions or need assistance, please don’t hesitate to contact us. Together, we can work to prevent check fraud and ensure your financial security.

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(September 2024)