Check Fraud: Why Writing Checks can be Hazardous to Your Wealth

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Writing checks is one of those activities which, like driving, becomes so ordinary that we can’t see the potential hazards we face every time we do it.

But every time we use a check to make a payment there is a real potential that it can fall into the wrong hands exposing us to a one time loss of money or worse, the outright theft of our identity.

One example of what a thief could do with your check is a process called “check washing”. The check is soaked in a solution using bleach or other household chemicals causing the ink to wash off the check. The thief can remove all handwritten ink from the check and rewrite it as he pleases, or he could wash certain entries, like the amount, while preserving your signature for presentation.

Checks are a treasure trove of personal information

Another issue with checks is that we’re often unaware just how much information a typical check contains. It’s that information—more than the value of the check itself—that a thief might be interested in. With enough information, a thief can help himself to a lot more than the amount the check is written for.

Some of the information included on a typical check:

  1. Your name
  2. Your address
  3. Your phone number (often)
  4. Your bank routing number
  5. Your bank account number
  6. Your signature
  7. Personal information written on the “memo” line
  8. The account number of a bill or account being paid
  9. Depending on who you’re paying, sometimes a drivers license number or even your social security number

That’s a lot of information on a small slip of paper, and more than enough than a would-be thief would need to get a good start on stealing your identity. Even if he doesn’t attempt to go after your bank account, he has enough information to gain access to other areas of your financial life.

Checks are well traveled documents

Another potential problem is the fact that checks make their way through the financial and business communities offering access to any number of unintended parties.

Consider where a check typically goes:

  • In your mailbox and eventually to other peoples mailboxes
  • To the grocery store
  • To small business vendors ““ hair dressers, house cleaners, repairmen and other contractors
  • To utility companies
  • To creditors and insurance companies
  • To schools
  • To charities
  • With the internet, increasingly to foreign destinations

Think about all the information contained on your check that we listed above, then consider the number of checks you write in a typical month, all the places they go and all the hands they pass through. Every person who handles your check represents a potential identity thief!

What we can do to protect ourselves from Check Fraud

Considering the potential for what could happen, it’s close to a miracle that check fraud doesn’t happen more frequently than it does. It’s not possible to live a check free life, but there are steps we can take to protect ourselves from problems.

  1. Keep a supply of cash in the house and in your wallet so you can pay contractors and maintenance people in cash, rather than by check. The fewer checks put in circulation the better.
  2. Forego bank overdraft protection to limit the amount of money an altered check can be cashed for.
  3. Use a credit card or open a PayPal account for any online transactions. This is especially important for foreign transactions since the reach of local law enforcement stops at the border.
  4. Pay for groceries with either a debit or credit card.
  5. Mail your bill payments directly at the post office. Better yet, get a post office box for money related mail to eliminate the possibility of mail being stolen from your home mail box.
  6. Set up online bill payment for as many services as possible.
  7. Write your checks using gel pens, which are less likely to wash out of a check, or use checks specifically designed to show a “void” message when chemically altered.
  8. Greeting cards are special targets since they often contain money. Consider mailing them in a larger envelope, rather than in the obvious one that comes with the card.

A little bit of moderation in our use of checks can go a long way toward preventing what could be a complete disaster should a check fall into the wrong hands.

Can you think of other methods we can use to reduce or eliminate the chance that we fall victim to check fraud?

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