The FBI and USPIS are warning that check fraud is on the rise, with a significant volume enabled through mail theft. Suspicious Activity Reports related to check fraud have nearly doubled from 2021 to 2023. Fraudsters take advantage of regulations requiring financial institutions to make check funds available within specified time frames, which is often too short a window for the consumer or financial institutions to identify and stop the fraud. As a result, the compromised checks clear, and the funds are withdrawn by the criminal participants before the fraud is detected. Fraudsters gain access to legitimate checks and sensitive financial data by stealing mailed checks from USPS facilities or during delivery to the intended recipient. Check theft occurs several ways – see list above.

To make the checks appear legitimate, fraudsters use check washing or other check “cooking” techniques to alter checks or create counterfeits. In other instances, checks are unaltered and deposited with forged endorsements.

Check washing involves the use of chemicals to physically alter the check, typically altering the original payee and financial amount.

Check cooking involves the digital manipulation of an image of a stolen check. Using readily available photo editing software and high-tech printers, fraudsters can manufacture checks. Check cooking allows fraudsters to manufacture multiple checks from a single check image. Often these checks are written for smaller amounts which can go undetected for longer periods of time by escaping the scrutiny or visibility of a larger check amount.
Stolen checks are deposited, often by a collusive account holder who is recruited by the fraudster or sold online for a fraction of the face value to other criminal actors who deposit the checks. In many cases, financial institutions, consumers, and law enforcement agencies are not aware of the fraudulent activity until after funds have been illicitly withdrawn.