How Writing Paper Checks Can Expose You to Fraud and Theft
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What is the main topic discussed in this episode?
Here's your Money Briefing for Thursday, May 25th. I'm J.R. Whelan for The Wall Street Journal. Lots of us use debit cards and payment apps to make purchases, but many people still write out paper checks, and that exposes them to being the target of fraudsters.
According to the Treasury Department, in 2022, banks filed 680,000 check fraud reports. That's almost double the 350,000 fraud reports filed in 2021.
We'll talk to Oyen Adedoyen from the WSJ personal finance team about ways to reduce your risks after the break.
Lots of people are still writing out paper checks, and that's raised the likelihood of them being the target of fraud and theft. Oyen Adedoyen from the Wall Street Journal personal finance team joins us to talk about ways to reduce your chances of being at risk. So, Oyen, how widespread is fraud and theft regarding the use of paper checks?
How common is check fraud and what do recent Treasury Department numbers show?
The theft of checks mailed through the U.S. Postal Service has jumped significantly over the past 18 months, specifically after 2021. So according to the Treasury Department, in 2022, banks filed 680,000 check fraud reports. That's almost double the 350,000 fraud reports filed in 2021.
So why are people still using paper checks? Making payments online is so easy.
Yeah, for some people, they just prefer it. They got into the habit of sending paper checks, specifically, you know, older folks and people who are not as tech savvy are going to be writing those paper checks more. In other cases, certain companies only collect paper checks as payment, especially rent companies, mortgage companies, utility services. They're going to still be asking for those paper checks.
Who tends to be the most at risk of being a fraud victim?
A consumer bank managing director at JPMorgan Chase told me that fraudsters don't discriminate. So anyone who writes checks can be at risk of this type of fraud. However, most of the people that are stealing the checks are not just doing it one time, and they're not looking for a big check. They're usually looking for those incremental checks made out to smaller amounts that the victim might not even notice is missing until it's too late.
Oh, so maybe check your bank account often.
Yes, exactly. It's really important to check your bank account constantly just to make sure that you're up to date on what's coming in and what's coming out.
Why are people still using paper checks despite digital payment options?
How are the bad guys getting a hold of checks, and what are they specifically doing to collect money illegally?
They're stealing these checks from those big blue USPS mailing boxes that you see in neighborhoods and around schools. They're also robbing the people who deliver the mail. And usually those people will have a master key that can open a lot of those boxes. And so as soon as they get access to that key, they can get access to all of the mail that's in there. Some cases, they're also stealing apartment mailboxes as well. So they're looking in those in order to find anything that's a check that they can just take. And in these cases, they're depositing them into their own accounts or into fraudulent accounts that they've created solely for the purpose of cashing these checks.
Now, the short answer to this question might be stop using paper checks. But let's talk about ways that financial experts say that people who do use paper checks can protect themselves from fraud. What steps can people take even before filling out a check?
One of those things is knowing exactly where you're keeping your checkbooks. So a lot of people might throw their checkbooks in a drawer because they don't use them that much. And that is a big no-no, banking experts say. You should know exactly where your checks are. In some cases, you know, leaving your checkbook out and about is almost as dangerous as leaving your social security card out.
Who is most at risk of check theft and why should you monitor accounts daily?
So make sure that checkbook is in a safe place and try as much as possible to limit the number of checks you write. But if that's not possible, then make sure that you're checking your bank account every day, especially around the holidays like Memorial Day and Christmas, where banks are often going to be closed.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:02–1:08
2
How common is check fraud and what do recent Treasury Department numbers show?
1:08–2:34
3
Why are people still using paper checks despite digital payment options?
2:34–3:52
4
Who is most at risk of check theft and why should you monitor accounts daily?
3:52–5:16
5
How are thieves stealing mailed checks and what methods do they use to cash them?
5:16–7:04
6
What pre-check steps can you take to protect your checkbook and reduce fraud risk?
7:04–7:33
Speakers
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