Check Fraud: A Continuing Threat
While digital payments continue to increase, checks remain a preferred payment method for many businesses and consumers. However, numerous sources report increasing levels of check fraud in recent years, despite overall decreases in check usage. For example, the U.S. Department of the Treasury reported (Off-site) a 385% increase in check fraud between the official start of the COVID-19 pandemic in 2020 and year-end 2023.
Checks can be stolen, altered or forged. For instance, the physical nature of paper checks makes them susceptible to theft while in transit or when left in unsecured locations. Products and services to detect altered or forged checks during the clearing process have varying degrees of effectiveness given that checks do not inherently include explicit security features. Checks also contain sensitive information — including the payer’s name, account number, bank routing number, address and signature — that can be used by criminals to conduct other forms of payments fraud. As a result, check fraud continues to be a persistent, evolving threat to the payments industry.
Criminals exploit vulnerabilities of paper and electronic checks, leading to billions of dollars in financial losses (Off-site) and operational costs for financial institutions, businesses and consumers.
Preventing and Detecting Check Fraud
Not only does check fraud cause financial losses and operational disruptions, but it also can provide a gateway to other types of criminal activity and often is connected to new account fraud, identity fraud and scams. Addressing check fraud is a critical step in safeguarding the U.S. payment system.
In 2025, the Federal Reserve released a Check Fraud Mitigation Toolkit to support the payments industry in the fight against check fraud. This online repository for financial institutions, businesses and consumers offers a collection of easy-to-navigate modules with informative resources designed to enhance awareness and understanding of how to prevent and detect check fraud.
Stay informed about the Fed’s efforts to support payment security and mitigate fraud by joining the FedPayments Improvement Community.