Tips to Minimize the Risk of Check Washing

As more apps are created for transferring money, the use of paper checks has been declining. Despite this, criminals have increasingly targeted personal mailboxes and postal service collection boxes with the goal of finding paper checks to potentially utilize in check washing fraud schemes. 

Check washing is a type of fraud that occurs when a stolen check is treated with chemicals, such as nail polish remover, to remove dollar amounts and the name of the payee. Typically, lawbreakers replace the information with larger sums of money and a different recipient before cashing the check into an account they control.

According to the Financial Crimes Enforcement Network, the Postal Inspection Service received more than 299,000 complaints of mail theft between March 2020 and February 2021, an increase of 161 percent from the previous year. 

Check washing issues can arise for either outbound and inbound checks and can affect both individuals and businesses. Some common ways criminals steal checks include:

  • Personal mailboxes
    • Criminals will drive through residential areas in search of mailboxes with the carrier signal up, usually a red flag, to alert the postman that mail is to be picked up. That flag also signals criminals to a potential target in gaining access to paper checks.
  • Postal service collection boxes
    • Criminals will take large sums of mail from the blue collection boxes after purchasing or stealing a postman’s master key, also known as an arrow key.

Stealing checks may also lead to additional fraud in terms of how criminals need to cash the checks. For instance, the stolen checks could have been written for personal reasons, tax refunds, business, etc., but in order to cash those checks, criminals may have to go to great lengths to steal the identity of the recipient or even create a fake business with a similar name. 

There are a number of ways to minimize the risk of check washing or how to catch it early, including:

  •  Use electronic payment methods, including ACH
  • If mailing a paper check, refrain from using your personal mailbox for a long period of time with the flag up
  •  If mailing a paper check, walk into the post office and either place the mail in the lobby mail slot or hand it to a postal worker 
  • If using a postal service collection blue box, drop off the mail before the day’s last scheduled pickup, which will avoid the check sitting overnight in the box
  • After mailing a check, check your bank account to ensure it was cashed for the proper amount and check for anything suspicious about the check
  •  Businesses can add positive pay to the checking account, which would prevent unauthorized individuals from cashing check

If you think you or your organization has been the victim of check washing, contact your bank immediately. Also, contact the intended recipient of the check to let them know what happened, since the perpetrators may have been operating in their local area and other payments they were expecting could be affected. 

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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