However, the reality is a bit more nuanced. While check fraud may not be as prominent as it once was, it remains a risk businesses should be mindful of to avoid potential financial setbacks.

Consider these statistics:

• Sixty-one percent of Americans still write checks.
• Global losses from check fraud reached $24 billion in 2024.

These numbers highlight why it’s important for business owners to stay informed about these risks and take steps to protect their financial security.

What Is Business Check Fraud and How Does It Happen?

Check fraud happens when someone uses a check dishonestly to steal money or property. This can happen primarily through outside threats such as stolen mail but also via internal issues such as employees misusing checks. Either way, understanding the common check fraud types better positions you to spot these risks before they harm your business: 

Mail Theft

Mail theft is a serious crime, yet criminals continue to exploit unsecured mailboxes and unattended drop-offs. Without locks or surveillance, stealing sensitive documents, checks and packages is easy — and the consequences can be costly. 

A stolen check can be altered or forged to drain funds, while personal details found in letters may be used for identity theft. But criminals aren’t always outsiders. Some individuals with direct access to mail misuse their position to steal sensitive documents for financial gain. 

Other Types of Check Fraud

Stealing mail is the predominant way for criminals to commit check fraud. However, they have plenty of other tricks up their sleeves to manipulate financial systems and take money that isn’t theirs, including:

• Check washing: Erasing and changing details on a stolen check to cash it or make unauthorized payments.
• Check counterfeiting: Creating fake checks that look real.
• Internal fraud: Employees abusing access to company checks by forging signatures or altering payment details

The Risks of Using Checks

Understanding how check fraud happens highlights the inherent risks of using checks as a payment method.

For instance, checks display sensitive business details such as your:

• Name
• Address
• Routing number
• Account number

This information provides counterfeiters everything they need to create fake checks or access your accounts, putting your business at risk of financial theft.

Unlike instant digital payments, it often takes days or weeks to realize a check has been stolen or altered. This gives fraudsters ample time to exploit your account.

Once a fraudulent check clears, recovering the stolen funds can be a lengthy process, often requiring extensive investigations and legal action, which can be costly. This is why prevention is key when it comes to check fraud.

How Can You Prevent Check Fraud?

Partner With Your Bank for Check Fraud Prevention

Banks offer valuable tools to help businesses protect themselves from check fraud. One such tool is Positive Pay, a fraud prevention service that compares checks presented for payment with those issued by your company. 

If discrepancies are detected, such as mismatched amounts or unauthorized payees, your bank notifies you before processing the payment. This gives you a chance to stop fraudulent transactions in their tracks. 

Online Bill Pay is another effective strategy. Switching to electronic payments reduces your business’s dependence on physical checks, which are much more vulnerable to theft and fraud.

Strengthen Your Business’s Payment Practices

Beyond banking tools such as Positive Pay and Online Bill Pay, strengthening your day-to-day payment practices is central to protecting your business from check fraud.

• Start by monitoring your account activity daily. This simple routine lets you detect and address potential fraud before it escalates.
• Handle checks with care to minimize the risk of theft. For example, avoid leaving them in unsecured areas, such as open mailboxes or unattended desks. Instead, use secure drop boxes or deliver checks directly to the post office. It’s also wise to use certified mail, which is insured by USPS and keeps mail under lock and key.

Combining these proactive measures with bank-provided fraud prevention tools will create a robust defense against check fraud.

Why Proactive Measures Matter

Check fraud remains a serious and growing concern, underscoring the need for businesses to stay vigilant. Proactively addressing vulnerabilities is essential to shielding your business from financial harm.

To learn more about how to safeguard your account, contact a Banc of California Relationship Manager and Treasury Relationship Manager who can be your first line of defense to help guard against fraud. For more information on protecting your business, visit the Banc of California Business Insights page.