Check Fraud Is Surging: Why Every Business Owner Should Stop Mailing Checks

Think Check Fraud Is an Old Problem? Think Again.

Many business owners assume cybercriminals only target computers, email accounts, or credit cards.

In reality, one of the fastest-growing financial crimes in America starts with something far more ordinary: a paper check.

Over the past five years, criminals have turned stolen mail and paper checks into a sophisticated business. They steal checks from mailboxes, chemically remove the ink (“check washing”), alter the payee or amount, create counterfeit copies, and deposit them before the victim even realizes anything happened.

The result?

Thousands of businesses and consumers have lost millions of dollars, and many never expected a simple payment in the mail could become a cybersecurity incident.

The Numbers Tell the Story

Federal agencies have been sounding the alarm because check fraud has accelerated dramatically.

According to the Federal Bureau of Investigation (FBI) and U.S. Postal Inspection Service (USPIS):

  • Suspicious Activity Reports (SARs) related to check fraud nearly doubled between 2021 and 2023.
  • Financial institutions reported more than 680,000 suspicious check fraud activities in 2022, compared to approximately 350,000 in 2021.
  • The U.S. Postal Inspection Service recovers more than $1 billion in counterfeit checks and money orders every year.
  • Organized mail theft has become one of the primary sources of stolen checks, targeting residential mailboxes, business mailrooms, USPS collection boxes, and even postal carriers.
  • The Financial Crimes Enforcement Network (FinCEN) reports that mail theft-related check fraud has become one of the fastest-growing financial crimes affecting both businesses and consumers.

Source: FBI, U.S. Postal Inspection Service (USPIS), Financial Crimes Enforcement Network (FinCEN)

How Criminals Steal Your Money

Most victims never realize anything happened until their bank account has already been drained.

Here’s how it typically works.

Step 1: Steal the Mail

Criminals target:

  • Business mailboxes
  • Residential mailboxes
  • USPS blue collection boxes
  • Office mailrooms
  • Postal delivery routes

Some organized crime groups have even stolen USPS “Arrow Keys,” allowing them access to hundreds of mailboxes at once.

Step 2: Wash the Check

Using chemicals or specialized solvents, criminals remove the handwritten ink while leaving the check’s security printing intact.

The check now appears blank.

Step 3: Rewrite or Counterfeit It

Once the original information has been removed, criminals:

  • Change the payee
  • Increase the dollar amount
  • Deposit it into fraudulent accounts
  • Create counterfeit copies using high-quality printers

This process is commonly known as check washing.

Step 4: Cash Out Quickly

Because banks are required to make deposited funds available within certain timeframes, criminals often withdraw the money before the fraud is discovered.

By the time the account owner notices the missing funds, the money is often gone.

Why Small Businesses Are Prime Targets

Many small businesses still rely heavily on paper checks for:

  • Vendor payments
  • Payroll
  • Rent
  • Tax payments
  • Insurance premiums
  • Professional services

Unlike large corporations with dedicated accounting departments and fraud prevention systems, many small businesses:

  • Have only one employee managing finances
  • Review bank statements only once per month
  • Mail checks from office mailboxes
  • Use standard business checks without advanced security features

These habits create opportunities for criminals.

The Hidden Cost of Check Fraud

When businesses think about check fraud, they usually focus on the stolen money.

Unfortunately, that’s only the beginning.

Victims often experience:

  • Cash flow disruptions
  • Delayed vendor payments
  • Payroll issues
  • Late payment penalties
  • Hours or even weeks spent working with banks
  • Insurance claims
  • Police reports
  • USPS investigations
  • Lost productivity

Even if the money is eventually recovered, the operational disruption can be significant.

Why This Is Also a Cybersecurity Issue

Many people separate financial fraud from cybersecurity.

Today’s criminals don’t.

Modern cybercriminal organizations look for the easiest path to your money, whether that’s phishing emails, ransomware, stolen passwords, or paper checks.

Financial security is cybersecurity.

Your business should protect:

  • Email
  • Banking systems
  • Microsoft 365 accounts
  • Financial processes
  • Employee identities
  • Physical mail
  • Payment workflows

Every weak point becomes another opportunity for criminals.

The Best Defense: Stop Mailing Checks

The FBI recommends reducing or eliminating paper checks whenever possible.

Safer alternatives include:

  • ACH payments
  • Online bill pay
  • Electronic vendor payments
  • Secure banking portals
  • Digital invoicing systems

Electronic payments remove the physical document criminals need to steal.

If You Must Mail Checks

Sometimes paper checks are unavoidable.

If you continue mailing checks, follow these best practices.

Use Security Checks

Choose business checks that include:

  • Watermarks
  • Microprinting
  • Chemical protection
  • Security screens
  • Heat-sensitive ink
  • Holograms

These features make alteration much more difficult.

Write with Permanent Gel Ink

The U.S. Postal Inspection Service recommends using permanent black gel ink because it penetrates paper fibers more effectively and is much harder to remove during check washing.

Mail Checks Securely

Avoid leaving outgoing mail in:

  • Residential mailboxes overnight
  • Office mailboxes after business hours
  • Unsecured mailrooms

Instead:

  • Drop checks inside your local Post Office.
  • Use USPS collection boxes before the day’s final pickup.

Monitor Your Accounts Frequently

Don’t wait until month-end.

Review your accounts several times each week.

Watch for:

  • Unknown withdrawals
  • Duplicate payments
  • Altered check images
  • Unexpected electronic transfers

The sooner fraud is detected, the easier it is to stop additional losses.

Ask Your Bank About Positive Pay

Positive Pay is one of the most effective fraud prevention services available for businesses.

When you issue a check, your bank records:

  • Check number
  • Dollar amount
  • Payee

If someone attempts to cash an altered or counterfeit version, the bank flags it before payment.

If your business still writes checks regularly, Positive Pay should be part of your fraud prevention strategy.

What To Do If Your Business Becomes a Victim

Act immediately.

  1. Contact your financial institution.
  2. Report the fraudulent transaction.
  3. Request copies of altered checks.
  4. Close compromised accounts if necessary.
  5. Report the theft to the U.S. Postal Inspection Service (USPIS).
  6. File a local police report.
  7. Report the incident to the FBI’s Internet Crime Complaint Center (IC3) when appropriate.

Time matters.

The faster you report fraud, the greater your chance of recovering funds.

How Ferrari Networks Helps Protect Businesses

At Ferrari Networks, we believe cybersecurity extends beyond computers.

Protecting your business means protecting every way criminals can access your money and your data.

Our managed IT and cybersecurity services help businesses throughout Buffalo, Niagara Falls, and Western New York:

  • Secure Microsoft 365
  • Protect email systems
  • Monitor networks 24/7
  • Strengthen identity security
  • Reduce financial risk
  • Improve employee cybersecurity awareness
  • Build stronger business continuity plans

Because the best security isn’t just reacting to attacks, it’s preventing them before they happen.

Final Thoughts

Check fraud isn’t yesterday’s crime.

It’s one of today’s fastest-growing financial threats.

As criminals continue combining traditional mail theft with modern fraud techniques, businesses need to rethink how they handle payments.

Reducing paper checks, implementing stronger banking controls, and partnering with a proactive IT and cybersecurity provider can significantly reduce your risk.

If you’re unsure whether your business has hidden vulnerabilities, now is the perfect time to find out.

Schedule a complimentary cybersecurity and technology review with Ferrari Networks and let us help you identify risks before criminals do.

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