Can you recall Leonardo DiCaprio’s 2002 portrayal of Frank Abagnale in Catch Me If You Can, washing PanAm payroll checks in a hotel bathtub? That scene might scream vintage, but check washing isn’t just a relic of the past. This old-school scam is making a shocking comeback. In January 2025, the FBI and United States Postal Inspection Service (USPIS) issued a stark warning: check fraud is surging, often starting right at the post box. The Association of Certified Fraud Examiners (ACFE) further highlighted this threat in their 2024 Report to the Nations, identifying check and payment tampering as one of the highest dollar value asset misappropriation schemes, with a median loss of $155,000 per case. If your business still relies on checks for payments, these warnings are for you. Read on to learn how to protect your company from this resurgent threat.

How is check fraud still feasible?

You might assume that paper checks and physical mail are relics of a bygone era. However, the reality is that countless businesses, from small mom-and-pops to large corporations, continue to process and send significant volumes of checks daily. Fraudsters are acutely aware of this ongoing reliance, actively seeking vulnerabilities where companies have not adequately secured their payment processes. The critical first step in these schemes, of course, is gaining unauthorized possession of these legitimately issued checks.

The FBI and USPIS have identified several alarming methods for check interception, including theft directly from residential and business mailboxes, brazen attacks on mail carriers, pilfering from USPS facilities, and even insider collusion among postal employees. A stark example of this vulnerability occurred in 2023, when a USPS employee and two accomplices were apprehended after orchestrating a massive scheme that stole $24 million worth of checks over just two years.

Once obtained, these physical checks become the canvas for two primary alteration methods. The first is check washing, the “old school” chemical process that erases original ink to allow for new payee names and amounts. The second method, more modern and equally insidious, is check cooking, in which fraudsters leverage digital imaging tools to manipulate check details and create entirely new fraudulent checks. They can even generate multiple duplicates from a single stolen original.

How can we protect our businesses against check fraud schemes?

Payee positive pay

If your business relies on the use of checks to make payments, we recommend you work with your bank to enable payee positive pay. There is typically a fee associated with the use of positive pay, but that fee is likely far less than what you stand to lose without positive pay enabled. We’ve been in the room when a client found out that a $40,000 check ended up in the wrong hands. Unfortunately, the client didn’t have the payee positive pay feature enabled, which allowed the bad actor to cash the check.

Positive pay itself isn’t new, but it has evolved over time and it’s a service you generally have to choose to use. Positive pay acts as a filter on your bank accounts. When a person presents a check to be cashed at a financial institution, the check must match up to the list of checks you’ve pre-approved for your bank to cash. If the check presented isn’t on the list to be cash, the check is flagged, and your bank asks you to approve or deny the check to be cashed. While this feature seems like a no brainer, positive pay hasn’t always included payee information, meaning a presented check would only need to have the check number and amount match up to the approved checklist. Luckily positive pay has evolved to include a payee feature which stops a check from being cash if the payee on the presented check doesn’t match your approved checklist.

Electronic payment systems

In addition to added security, there are many benefits to be derived from using online payments platforms if they are implemented and used appropriately. Typical platforms allow for integration with accounting systems and will allow for a bill payment approval hierarchy. We do not advocate for any one platform, but we’ve worked with a number of clients that use BILL (formerly Bill.com) and QuickBooks Bill Pay and have found that it offers some protection against the risks associated with typical paper check payments. While these platforms do offer to send paper checks, they also allow for ACH based electronic payments, which can reduce risks associated with payment theft if appropriately implemented.

For handwritten checks

• Use a gel pen to fill out the check. The ink in gel pens is more resistant to  chemical alteration than other types of ink.
• Fill in every field on the check, including the memo.
• Draw lines through remaining blank space to prevent additional information from being added to the check.

General recommendations

• Follow up with vendors when your checks sent to the vendor haven’t been deposited for a longer period of time than is typical of the vendor. If the vendor typically cashes a check within two weeks, call the vendor and confirm they’ve received the check if it’s been outstanding longer than two weeks.
• Place stop payments on lost checks within your banking system.
• Ensure that void checks are clearly marked with the word “VOID” in large letters using a black gel pen or other permanent ink. Record the check as void in your accounting platform or checkbook. Consider making a copy of the check for retention. Shred the check.
• For checks written to individuals, consider offering the option for them to retrieve the check in person with photo ID.
• Use discreet envelopes that conceal the contents when mailing checks.
• Mail checks by depositing them in the outgoing mailbox located inside the post office rather than in unmonitored mailboxes.

For more information on protecting your business from payment and other forms of asset misappropriation schemes, contact Emily Bradford or Robin Perkins within our Forensic and Integrity Services group.