The Green Sheet Online Edition
March 23, 2026 • 26:03:02
The evolution of check acceptance, and fraud
Checks are alive and well and continue to grease the wheels of commerce, something businesses and fraudsters alike understand. Precise numbers are hard to pin down, as there is no central repository tracking check fraud. Still, the Financial Crimes Enforcement Network (FinCEN) warned in a February 2023 alert of a “nationwide surge,” and industry stakeholders consistently describe check fraud as a growing threat.
"AI [artificial intelligence] is making it easier to do fraud," said Travis Powers, vice president for partner relations at CrossCheck, a California-based company specializing in check verification, guarantee and conversion. "Anything AI can do to benefit you, fraudsters can do to trick you."
Jason Schwabline, chief commercial officer at CheckAlt, which provides integrated receivables services to financial institutions and businesses, said throttled investment by FIs and their business clients in fraud prevention has contributed to a rise in check fraud.
"No one really invested in this space because they thought it [check writing] was going away," he said. What's more, check fraud is no longer committed by lone wolves. "Now it's being done by organized check interception rings," Schwabline added.
Criminals are raiding the blue boxes the U.S. Postal Service has placed strategically throughout towns and cities, capturing the information from checks they find to produce counterfeits and/or sell the information on the dark web, enabling organized rings to conduct large-scale forgery, alteration and counterfeit schemes.
Check fraud by the numbers
FinCEN said that during a six-month review period in 2023, it received 15,417 Bank Secrecy Act (BSA) reports (also known as Suspicious Activity Reports) from 841 financial institutions related to mail-theft check fraud, totaling more than $688 million in suspicious activity. To put this into perspective, The Green Sheet reported in 2002 that surveys suggested $850 million in bad checks were being written annually in the United States.
The findings underscore the growing scale of the problem. “The analysis demonstrates the severity of mail theft-related check fraud and why fraud is a high priority, while also highlighting the important role financial institutions play in reporting information pursuant to the Bank Secrecy Act to assist in bringing fraudsters to justice,” Chief Postal Inspector Gary Barksdale said in a 2023 statement.
“Suspicious Activity Reports are a valuable tool utilized by Postal Inspectors for not only targeting criminal networks and their illegally derived assets, but they also aid in the identification of victims," Barksdale added.
In its analysis of BSA reports, FinCEN identified three primary ways checks were used after being stolen from the U.S. mail:
- 44 percent were altered and then deposited
- 6 percent were used as templates to create counterfeit checks
- 20 percent were fraudulently signed and deposited
To make bogus checks look legitimate, fraudsters often use check washing and other check "cooking" techniques to alter paper items or create counterfeits. (Check washing involves using chemicals to physically alter the check, typically altering the original payee and financial amount.)
In other instances, checks are simply deposited with forged endorsements. Or, as Powers explained, fraudsters use AI to simply create checks using stolen transit and routing numbers.
Flashback: What Green Sheet reported in 2002
In a survey conducted by The Green Sheet in 2002, 71 percent of consumers said they expected their check writing to increase or stay the same. Checks also remained the dominant payment method for businesses. Of the 9 billion business-to-business payments made in 2001, 83 percent were made by check, according to industry research at the time.
"[W]e often have the sense in the U.S. that it will take only a few banks to reshape the future of the check. This could not be further from the truth," Green Sheet founder Paul H. Green wrote in that 2002 report. "Only 11 percent of checks are written on the 10 largest bank holding companies in the U.S. In turn, these banks clear only 16 percent of the checks of others.
"In fact, 69 percent of all checks written are drawn on banks other than the top 100 bank holding companies in the U.S., and institutions other than the top 100 are the collecting banks for 54 percent of all banks cleared….
It would appear there is no definitive or final word on how much, where, when and by whom when it comes to paper payment. But the key ingredient in all of this is the consumer's love of paper. Consumers hold tighter to their checks than a lion to a fresh kill.
"While convenience is a factor, it's all about comfort. Consumers are comfortable writing checks and asking them to give up that comfort for alternatives is akin to asking a teenager to give up a favorite pair of jeans."
Flash forward: today it's pretty much all about digital
That was then. Today, check writing has become far less common for consumers, who increasingly rely on credit and debit cards and digital wallets for both online and in-store payments.
Digital wallet adoption is soaring. According to research by PYMNTS.com, as many as 77 percent of consumers have used a digital wallet; usage is even higher among younger consumers (84 percent of Generation Z and 81 percent of millennials). Chain Store Age reported that 37 percent of mobile wallet users have stopped shopping at a retailer that did not accept digital payments. According to PYMNTS.com's data ,digital wallets are expected to exceed 30 percent of in-store transactions by 2030.
But none of this is to suggest checks are obsolete. In 2021, approximately 11 billion checks were written, accounting for approximately 5 percent of overall noncash payments, according to the Federal Reserve. Those 11 billion checks represented about 21 percent of the value of noncash payments.
"Checks remain important payment mechanisms for consumers and businesses," Michelle Bowman, vice chair of the Federal Reserve Board said in a statement. "Fraud is a critical issue in the U.S. payments system that warrants ongoing attention." To that end, the federal bank regulatory agencies last June requested public comment on how the agencies could best address payments and check fraud.
"Even though checks are an increasingly rare form of payment U.S. merchants must devote disproportionate resources to detecting and preventing check fraud," the Merchant Advisory Group wrote in its comment letter. "Check fraud tends to be more sophisticated, and therefore harder to detect, than other forms of payment fraud. As a result, check fraud remains one of the most persistent and costly forms of fraud in the payment sector."
"Check fraud has surged in recent years, driven by mail-system vulnerabilities, widespread availability of check-washing tools, and criminals' focus on exploiting this antiquated payment method," the Bank Policy Institute told regulators. "The surge in check fraud has left banks with high volumes of claims and disputes, exposing the limits of outdated legal and operational processes, creating delays for customers and disproportionate burdens for small financial institutions lacking the resources to absorb rising losses or manage complex disputes."
The BPI continued, "Absent a wholesale restructuring of the check collection process...the regulatory framework for check collections and funds availability requires enhancement to provide clarity as to parties' rights and obligations, streamline interbank dispute resolution processes, and facilitate fraud risk management and prevention."
For example, the group said, regulations could be changed to allow FIs to place exception holds on check deposits specifically when a fraud or scam is suspected.
Checks continue to dominate certain sectors
Many business sectors still receive high volumes of checks, Schwabline noted, particularly utilities, healthcare, municipalities, property management and insurance. A significant share of those payments are business-to-business transactions.
Powers agreed, stating, "We barely do any retail anymore," he said of CrossCheck. Retailers that accept checks and use check authorization and guarantee services are selling large-ticket items, like furniture stores, where items sold cost $500 or more. CrossCheck's biggest market is car dealerships. "We're seeing no decrease in checks there," said Powers. Often, CrossCheck's clients use the company's mobile app to capture pictures and create remote deposits of those checks.
Interestingly, financial technology firms are one of the sectors that you would least expect to receive checks, but they do, Schwabline pointed out. "These are organizations that don't know how to handle checks." That's because, for obvious reasons, they are all about digital.
Another factor may be that many of these firms are being run by younger professionals. Individuals 30 and younger feel much more comfortable with digital forms of payments; many don't even write checks, Powers noted. Still, checks have longevity. "Check usage will decline, but [usage] will continue long past our lifetimes," Powers predicted.
So, the question isn't whether checks belong in a modern payments strategy, but how to keep them from slowing down treasury management functions like cash application, reconciliation and reporting, as well as bank handling, Schwabline said.
Modern lockbox processing addresses this by digitizing checks and remittance data the moment the items arrive in a processing center and combining that information with the natively digital remittance and payment information so that everything is in a single, electronic stream. "Better than 60 percent of the new deals we're getting are with people wanting to see everything in one spot," Schwabline said.
The challenge is no longer whether checks will fade but how to manage them more securely while they persist. 
Patti Murphy is senior editor at The Green Sheet, president of ProScribes Ink (www.proscribes.net) and self-described payments maven of the fourth estate. Her Today in Payments reports are a regular feature of the Merchant Sales Podcast.
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