FinCEN Says Check Fraud Approached $700 Million Over 6 Months

Earlier this week, FinCEN reported that mail theft-related check fraud amounted to more than $688 million in a recent six-month period. The bulk of the reports were filed by banks, to the tune of 88% of all reports by filing.

As to the costs of it all: The average activity amount reported per Bank Secrecy Act report for mail theft-related check fraud was $44,774, while the median amount was $14,215, per the data.

That’s the overall impact. When reached for comment by PYMNTS, a FinCEN spokesperson said the agency would offer no additional insights.

But the report offers some pointers as to where the fraudsters are finding their targets.

New account fraud involved criminals opening new accounts, typically online, specifically designed to negotiate stolen checks.

“This most frequently occurred when stolen checks were made out to businesses,” said FinCEN, which operates as part of the U.S. Department of the Treasury. Checks made out to businesses can include commercial transactions, such as when buyers pay suppliers … and lost or delayed funds can have negative ripple effects up and down supply chains.

Separate data from the 2024 Association for Financial Professionals Payments Fraud and Control Survey Report noted that 80% of organizations were victims of payments fraud attacks/attempts last year – up 15% from 2022.

“Checks continue to be the payment method most vulnerable to fraud, with 65% of respondents reporting their organizations faced fraud attacks of this type,” said the firms surveyed.

Significant Impact

The impact has been significant, as 30% of companies affected in 2023 were unable to recover the funds lost.

“Paper checks are inherently and ironically very risky vehicles,” Ben Weiner, senior vice president and global head of B2B payments at Nuvei, told PYMNTS in November. “It’s about converting those types of payments into more secure forms like virtual cards while limiting the risk of manual error or fraud every time a payment is touched by a human.”

Although we are seeing movement away from checks, the pace has been gradual. A number of companies have been making strides to use technology to help client firms embrace digital payments and automation.

As PYMNTS reported Sept. 3, Zil Money’s OnlineCheckWriter.com now allows businesses to send checks funded by their credit card or wallet, as the company recently upgraded its check mailing services. With this service, OnlineCheckWriter.com allows users to send checks online; choose from delivery options like First Class Check Mailing, Express Mail USPS, USPS Priority or FedEx Standard Overnight; and track their checks until they arrive.

Elsewhere, in another recent, sector specific example, Otelier launched a product that automates accounts payable workflows for hotel operators. The new DigiPay product streamlines back-office operations by eliminating time spent processing invoices and cutting checks to suppliers.