In our digital world, it seems ironic check fraud is on the rise; however, earlier this year the Financial Crimes Enforcement Network (FinCEN) issued an alert indicating 680,000 cases of possible check fraud in 2022, a 49% increase from 2021. Total fraud will hit $24 billion in losses this year, roughly twice what it was five years ago. At this time, it does not appear check fraud is subsiding, so we want to educate our supporters on the most secure ways to donate this holiday season.
Theft-related fraud generally targets the U.S. mail where personal, business and tax refund checks are targeted. Interest in paper checks began to grow during the pandemic, when millions of government relief checks were mailed through the U.S. Postal system. Individuals and organized criminal operations alike are swiping checks from residential mailboxes or the iconic blue drop-off boxes. Then, they are removing the ink and selling the newly blank check or writing in whatever they want. They are also picking off checks paying government assistance, Social Security, or unemployment benefits.
But if opportunity is fueling the rise of check fraud, awareness can help slow it.
Three decades ago, in 1993, the Federal Reserve collected just over 19 billion checks. The Atlanta Fed notes the Fed processes about one-third of all checks. By last year, the number of checks collected by the Fed was down to about 3.4 billion after falling every year since 2000.
But the ever-dwindling pool of checks in circulation was obviously still well into the billions in 2022, and the chain of mail custody has proven a soft target for exploitation.
Criminals steal the master keys that open residential mailbox clusters. They pull checks out of collection boxes using homemade tools, including tools as simple as string tied to bottles drenched in glue. They even case neighborhoods and steal the mail intended for pickup.
Once they have the checks, they can “wash” them by removing the ink. All it takes is chemicals as common as the solvents in nail polish remover.So, for instance, a fraud victim might send out a check for $272 and discover it’s been cashed for nearly $5,000.
The criminals also take advantage of “float,” that is, days between when a check is accepted at a bank or business and when funds are withdrawn from the checking account. By the time the fraudulent check is detected by the account holder, the thieves are often long gone.
So, what can be done?
The post office has taken various steps to make check theft more difficult, including hardening mailboxes so it’s nearly impossible for thieves to pull out mail. Banks have adopted numerous mitigation measures, such as training tellers to flag possible fraud when they see check amounts coming in that are higher-than-normal for particular accounts. You can also take steps, including:
We realize, even if there are a couple billion fewer checks around these days, checks are still a part of financial transactions – especially for charitable donations. But as with any payment method, checks have very real vulnerabilities that plenty of people are trying right now to exploit. Understanding what they are can go a long way toward stopping fraudsters from stealing from you.
How to donate to ICAN?
ICAN is dedicated to ensuring the safety and security of our donors’ information, which is why we have chosen to partner with Proxurve Solutions Incorporated for our cybersecurity and IT Management strategy needs. By implementing a multi-layered security approach including Microsoft’s M365 security technologies, ICAN is investing in proactive security tools to ensure our team protects your data to the highest standards available. Some best practices when donating to ICAN:
Unfortunately today’s world requires a Zero Trust approach to ensuring data safety that is founded on three key principles: Verify Explicitly, Use Least Privilege Access, and Assume Breach. While some of these terms may be unfamiliar, know that we are investing in this approach to ensure we are doing everything possible to be a trusted custodian of your personal information while remaining focused to achieving our mission.