Check Fraud: How to Avoid It and Protect Your Finances - 1st Source

Today we use mobile banking apps and instant payments, so you might think criminals have moved on from paper checks. Unfortunately, check fraud is still widespread and increasing. Stolen checks are altered, forged, or counterfeited and then used to drain accounts or commit broader identity theft.

Check fraud is a felony, with serious consequences for those who commit it. But while the law punishes offenders, victims often face the stress of lost funds, delayed payments, and time spent restoring their accounts. The best strategy is prevention. By understanding how check fraud works and knowing how to avoid check fraud in your daily life, you can stay one step ahead.

Common Types of Check Fraud

Check fraud isn’t one single scam. Criminals use different methods depending on what’s easiest to pull off.

  • Check washing: A criminal steals a legitimate check and uses chemicals to “wash away” the original ink. They then rewrite the check to a different payee or a much higher amount.
  • Counterfeit checks: Fake checks are printed to look real, often used in sweepstakes scams, bogus job offers, or fake refund schemes.
  • Forged endorsements: A stolen check is signed and deposited by someone other than the intended recipient.
  • Mail theft: Checks are stolen directly from residential mailboxes or even postal drop boxes, sometimes using tools known as “mailbox fishing.”

Each method turns an ordinary piece of paper into an opportunity for fraud.

Real-World Examples

Your Personal Banking: Angela, a retiree, wrote a check to pay her property taxes and placed it in her home mailbox for pickup. Weeks later, she received a late notice from the county. When she checked her account, she saw that the original check had been “washed,” rewritten to a different name, and cashed for thousands of dollars.

Angela was shocked but acted quickly. She reported the fraud to 1st Source Bank, who secured her account and helped her switch to online bill pay. Now she uses the bank’s digital tools instead of mailing checks, which gives her real-time confirmation and less worry about whether her payments will arrive safely.

Your Business Banking: Martin manages a mid-sized landscaping company and regularly mailed checks to suppliers. One month, a vendor reported a payment hadn’t arrived. A few days later, Martin discovered the check had been stolen from the mail, altered for a higher amount, and deposited at another bank.

The altered check caused delays in paying the vendor and strained the business relationship. Martin contacted 1st Source Bank immediately, and the fraud team helped him recover funds and strengthen his processes.

How to Avoid Check Fraud

The most effective way to prevent check fraud is to reduce your reliance on paper checks. Electronic payments are faster, traceable, and harder for criminals to manipulate. Still, if you use checks, there are practical steps you can take:

  • Mail with care: Drop checks inside the post office or hand them directly to a clerk instead of leaving them in outdoor collection boxes overnight.
  • Use permanent ink: If you must write checks, use gel pens or other permanent ink that’s harder to wash away.
  • Review accounts often: Monitor statements and online banking for unauthorized withdrawals. Early detection can stop further losses.
  • Shred old checks: Don’t throw unused or canceled checks in the trash. Shred them to prevent theft.
  • Switch to electronic payments: Tools like online bill pay, ACH transfers, or business treasury services are safer alternatives.

Here’s how to avoid check fraud for individuals and families:
Switch to online bill pay or mobile banking whenever possible. These methods provide real-time confirmation that payments are delivered securely.

Here’s how to avoid check fraud for a business: Make secure digital payments part of your process and educate staff on spotting red flags. We recommend that small businesses use our Online and Mobile for Business tools, and that larger commercial business use our Treasury Services platform.

Safer Alternatives to Paper Checks

Paper checks have vulnerabilities that digital payments simply don’t. At 1st Source Bank, we offer secure solutions designed to help you move away from risky practices.

For Individuals and Families

  • Online Bill Pay: Pay utilities, taxes, and recurring expenses directly through your bank instead of mailing paper checks.
  • Mobile Banking App: Deposit checks, transfer money, and monitor accounts in real time with added security.
  • Debit Card Alerts: Set up real-time notifications for purchases or withdrawals so you’ll know right away if something unusual happens.
  • Account Monitoring: Check balances often and enable email or text alerts for suspicious activity.

For Business:

  • Immediate Payments: Real-time transfers that clear instantly, with tracking and confirmation.
  • Request for Payment (RFP): A tool that lets you request funds securely, giving customers confidence while reducing fraud exposure.
  • Online and Mobile for Business: A full suite of digital banking tools to help you pay vendors, monitor accounts, and prevent fraud from anywhere.
  • Treasury Services: Solutions for businesses that juggle large transactional portfolios or have multiple locations or subsidiaries.

What to Do if You Suspect Check Fraud

If you think a check has been stolen, altered, or forged, don’t wait. Quick action can prevent bigger losses.

  1. Contact 1st Source Bank immediately through our Report Fraud page so we can secure your accounts.
  2. File a complaint with the U.S. Postal Inspection Service if mail theft is involved.
  3. Review recent transactions and set up alerts to monitor any further activity.
  4. Document everything — keep copies of altered checks or suspicious correspondence.

Remember, you’re not alone. Fraud can happen to anyone, but taking action right away limits the damage and helps us protect you more effectively.

Why Prevention Is the Best Protection

Check fraud is a felony, but that doesn’t always comfort victims who’ve lost time and money. The strongest defense is prevention. By shifting to safer payment methods and building smart habits like shredding documents, using permanent ink, and monitoring accounts you reduce your exposure.

And if you’re a business, the case for digital payments is even stronger. With online and mobile banking tools, you can prevent many common fraud scenarios while saving time and streamlining operations.

Conclusion

Check fraud remains a serious risk, even in a digital-first world. But knowing how to avoid check fraud, adopting safer alternatives, and acting quickly if something seems wrong can keep your money and your business safe.

At 1st Source Bank, we’re committed to helping you prevent fraud before it happens. Whether you’re mailing one check or managing hundreds of vendor payments, we have solutions designed for your peace of mind.