ABA, Postal Inspectors in partnership to combat uptick in check fraud

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After years of skyrocketing check fraud, the American Bankers Association and the United States Postal Inspection Service have teamed up on a public awareness campaign to educate consumers on ways to prevent criminals from altering or "washing" checks.

The ABA and the law enforcement arm of the Postal Service on Tuesday announced an anti-check fraud initiative aimed at alerting the public about ways to protect checks sent in the mail. The groups also are trying to raise awareness about money mules and collusive account holders that transfer and move money on behalf of criminals. 

Check fraud has jumped 385% since the pandemic, the Treasury Department reported last month. Rob Nichols, the ABA's president and CEO, said the goal of the partnership is "to inform and protect consumers."

"Working together to address the unprecedented rise in check fraud offers us a number of opportunities to make a difference, including educating the public on how to safely use the mail system to send checks while also taking advantage of the advancements in payments technology banks offer," Nichols said in a press release. 

The Financial Crimes Enforcement Network expects another record-setting year for check fraud. Financial institutions filed more than 680,000 Suspicious Activity Reports in 2022, up from 350,000 in 2021. 

For the past three years, community banks have been complaining that their large-bank counterparts show no urgency in resolving claims for fraudulently altered checks. Small banks want to be paid in a timely manner when check fraud occurs. Though the process should take a maximum of 90 days, many small banks are waiting more than a year to get repaid for bad checks.

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"Certainly a lot could have been done sooner and a lot more needs to be done," said David Schroeder, senior vice president of federal governmental relations at the Community Bankers Association of Illinois. "This is not the solution, but I don't want to discount it either." 

Chief Postal Inspector Gary Barksdale said increased awareness of check fraud and check fraud prevention strategies will "empower the public to protect themselves from financial harm while making it more difficult for criminals to perpetrate this crime."

Frank Albergo, national president of the Postal Police Officers Association, said more needs to be done. Albergo has been calling for years for protection of letter carriers that are routinely being robbed at gunpoint by criminals stealing the mail. He said there needs to be a standardized way to warn customers when USPS Arrow keys have been stolen and to take blue collection boxes out of service if they have been damaged by theft.

"This may be the first time in the history of a law enforcement partnership where an anti-crime strategy does not include the utilization of uniformed police officers," Albergo said. 

As part of the effort to alert consumers, the ABA and Postal Inspectors unveiled an infographic that explains how fraudsters are targeting paper checks sent in the mail and using chemicals to "wash" the check, then changing the amount or making themselves the payee. The graphic suggests consumers use letter slots inside the Post Office to send mail and use pens with indelible black ink when writing checks to make it more difficult for criminals to wash them. 

The ABA said it is collaborating with law enforcement and its members are training bank employees to spot red flags when consumers deposit or try to cash fraudulent checks.