Bank fraud remains a constant risk because any time money or sensitive information is involved, fraudsters are looking for ways to take advantage. Although fraud tactics change over time, one type that has seen a noticeable rise in the past year is “check washing”. Check washing is a type of fraud where someone steals a legitimate check, uses chemicals to erase information like the payee name and amount. After they’ve “washed it”, they rewrite it to a new payee and often with a higher amount and cash or deposit it.
Why are Businesses at Risk for Check Washing Fraud?
If you mail checks, or rely on manual payment processes, your business is at risk for this type of fraud. Although digital payments are becoming more prevalent for day-to-day purchases, checks are still widely used in businesses, and that makes them a target. Fraudsters often take these checks from outgoing mail or unsecured mailboxes, and since the check itself is real, these fraudulent transactions can sometimes slip past initial reviews and only be discovered after funds are withdrawn. Often, it is not discovered until weeks – or sometimes months – later because you won’t know the funds are gone until you do a review of your transactions. A single altered check can lead to significant financial loss.
Use BILL to Eliminate Check Writing
The most effective way to protect your business from check washing fraud is to significantly reduce, or entirely eliminate, paper checks. Every check you write creates an opportunity for theft. By transitioning to secure electronic payment methods such as ACH or wire transfers, you will dramatically lower your exposure to this type of fraud while also gaining more efficient processes.
We’ve helped many business owners modernize their payment processes by implementing secure, proven software solutions that reduce fraud risk and save valuable time. These tools add stronger controls, better visibility, and smarter approval processes, which gives you more confidence and less manual work.
For instance, BILL is software designed to simplify bill payments and other payment processes, allowing you to pay vendors securely without relying on paper checks. You can learn more about BILL’s ACH resources on their website, or schedule a free consultation with us to identify the best software solutions tailored to your business needs.
Other Ways to Protect Yourself From Check Washing Fraud
In the meantime, there are a few measures you can take to reduce your risk of being a victim of check washing. While these actions can strengthen financial security, they often come at the cost of added manual work – time and effort that business owners are better off spending on growing their business.
- Use Positive Pay at your Bank: Positive Pay is a service offered by many banks where you authorize checks to clear your account each day. This is an added manual process, and there is likely a small cost, but the added layer of verification can stop altered checks before they clear.
- Use Secure Check Stock: You will have to order these, but using checks with built-in security features such as watermarks, chemical-resistant paper, and security screens can make it harder to alter check details.
- Mail Checks Securely: If you want to continue to use paper checks, you may want to add a daily trip to the post office to your to-do list. Avoid leaving any outgoing checks in unsecured mailboxes.
- Monitor Your Accounts Regularly: Be sure to review bank statements frequently and set up transaction alerts. The faster fraud is detected, the higher the chances of recovering funds.
Contact Avizo
As with any fraud, prevention starts with awareness. And now that you know about check washing, you may want to make a few smart process changes that can go a long way.
Digital payments reduce the risk of physical theft and tampering. We welcome an opportunity to work with business owners to understand their current payment processes and identify areas where inefficiencies exist. From there, we can implement the right software solutions to improve payment security, add appropriate controls, and simplify accounts payable without disrupting your day-to-day operations.
Diane Anderson
As our COO and Director of Client Development, Diane supports you during onboarding to ensure our services align with your goals. With a background of 25 years in banking, from teller to Bank President, she leads our bank-related consulting services, such as FDIC Placement Service, a unique offering she developed after recognizing a gap in solutions available to nonprofit clients.
