The Return of Check Fraud: Checks Sold on the Dark Web
Check fraud has seen a resurgence, with criminals leveraging the dark web to sell legitimate checks for fraudulent schemes. This disturbing trend poses a substantial threat to financial institutions and their customers, necessitating urgent and innovative measures to combat these sophisticated fraud tactics. One of the most common tactics involves criminals stealing checks from the […]
Check fraud has seen a resurgence, with criminals leveraging the dark web to sell legitimate checks for fraudulent schemes. This disturbing trend poses a substantial threat to financial institutions and their customers, necessitating urgent and innovative measures to combat these sophisticated fraud tactics. One of the most common tactics involves criminals stealing checks from the mail and altering them.
FinCEN Issues In-Depth Analysis of Check Fraud Related to Mail Theft (September 9, 2024)
“Financial Crimes Enforcement Network (FinCEN) received 15,417 Bank Secrecy Act (BSA)A reports from 841 financial institutions on mail theft related check fraud, amounting to more than $688 million in reported suspicious activity. FinCEN identified three primary outcomes after checks were stolen from the U.S. Mail:
(a) 44 percent were altered and then deposited.
(b) 26 percent were used as templates to create counterfeit checks.
(c) 20 percent were fraudulently signed and deposited.”
Another emerging trend is the sale of legitimate checks on the dark web. Criminals have made it disturbingly easy to purchase stolen checks, with listings offering bundles of 45 checks ranging from $1,000 to $100,000 for as little as $2,000.
This underground market operates with business-like efficiency, making check fraud accessible to a wider range of bad actors.
Combating Check Fraud
To combat these sophisticated fraud schemes, financial institutions must adapt and implement advanced technologies. Here are some strategies:
- Advanced Check Image Analysis Systems: These systems use handwriting analysis to detect changes in payee names and dollar amounts. Payee Positive Pay is another powerful tool, automatically comparing issued checks with presented checks to ensure the payee name, check number, and dollar amount match. Any mismatch triggers a fraud alert, helping banks stop fraud before it occurs.
- Dark Web Scanning: Banks should partner with an IT solutions provider to monitor the dark web for stolen account information and check listings. Continuous dark web scanning can help detect potential threats and leaked data before they can be exploited. (Contact Community Bankers of Michigan or your local association to get a list of IT vendors that provide these services.)
As criminals continue to innovate, so must the defenses against them. Financial institutions must stay vigilant and adapt to the changing landscape of check fraud to safeguard their operations and maintain customer trust.
Additional resources:
FBI / Alert: Mail Theft-Related Check Fraud on the Rise- January 27, 2025
USPIS Alert: Check Fraud – February 28, 2025
AARP: Read This Before Accepting a Stranger’s Check – January 17, 2025
LifeLock: How to tell if a check is fake – January 17, 2025
Bottomline: Check Fraud is up nearly 400%
Wisconsin Bankers Association: Check Use Down, But Check Fraud on the Rise
