Paper checks may feel old-fashioned in an increasingly digital world, but criminals have found new ways to turn them into a surprisingly effective tool for fraud.

In fact, while check use in the United States has steadily declined, check fraud has been rising. The Federal Reserve has specifically identified the increase in check fraud as an ongoing concern within the U.S. payments system.

Today's check fraud is not limited to someone forging a signature. Criminals may steal legitimate checks from the mail, alter them, create convincing counterfeit checks, or use fake checks as part of employment, prize, and online marketplace scams.

Understanding how these schemes work can make it much easier to recognize one before your money is at risk.

What Is Check Fraud?

Check fraud occurs when someone illegally creates, alters, steals or uses a check to obtain money.

A criminal may steal an actual check, change information written on it, reproduce it using legitimate account information or create a completely counterfeit check designed to look authentic.

Checks can be particularly valuable to criminals because they contain information tied directly to a financial account, including the financial institution's routing number and the account number.

Once that information is compromised, the problem may extend beyond the original check.

5 Common Types of Check Fraud to Watch For

1. Check Washing

Check washing usually begins with a legitimate check being stolen.

The criminal removes or alters information such as the name of the person or business being paid and, in some cases, changes the dollar amount. The altered check is then deposited or cashed.

The U.S. Postal Inspection Service warns that stolen checks can also be copied or scanned to create additional fraudulent checks.

Example: You mail a $100 check to pay a bill. Someone intercepts it, changes the payee and amount, and attempts to cash it for $1,000.

2. Counterfeit Checks

A counterfeit check may be created using information stolen from a legitimate personal or business account.

Modern printers, scanners and software can make these checks appear convincing. Some may even contain legitimate banking information, making it difficult to recognize the fraud just by looking at the check. The U.S. Postal Inspection Service warns that scammers use technology and blank check stock to create counterfeit checks.

3. Fake Job Check Scams

You receive an offer for a remote job or work-from-home opportunity. Your new "employer" sends you a check to purchase office equipment or supplies.

Then comes the catch.

They tell you to deposit the check and use some of the money to pay a specific vendor or send part of the money somewhere else.

Eventually, the original check is discovered to be fake.

The supposed employer disappears, but the money you sent was real.

Fake employment offers are one of several situations in which scammers use fraudulent checks to convince victims to send money elsewhere.

4. Overpayment Scams

Suppose you're selling furniture, electronics or another item online for $500.

The buyer sends you a check for $1,500 and claims it was an accident. They ask you to deposit the check and return the extra $1,000.

Your account may initially show the deposit.

You send the $1,000 back.

Days or even weeks later, the check is determined to be fraudulent. The deposit is reversed, and the $1,000 you sent to the scammer came from your own money.

5. Prize and Sweepstakes Checks

Congratulations! You've supposedly won a prize.

There's just one problem: you have to pay taxes, processing fees or another expense before receiving your winnings.

The scammer sends you a check and instructs you to deposit it, then send a portion of the money back to cover those fees.

This follows one of the biggest warning signs of a fake-check scam:

Someone sends you a check and then asks you to send some of the money somewhere else.

"But the Money Is in My Account."

This is where fake-check scams become especially dangerous.

When you deposit a check, some or all of the funds may become available before the financial institution has determined whether the check itself is legitimate.

Available funds do not necessarily mean the check is good.

The Federal Trade Commission warns that a fake check can take weeks to be identified. If you've already withdrawn or transferred the money before the fraud is discovered, you may be responsible for the money that was spent.

So if someone you don't know sends you a check and immediately wants you to:

• Send money back
• Buy gift cards
• Purchase cryptocurrency
• Wire money
• Pay another person or "vendor"
• Move the money through another payment service

Stop.

Do not assume the check is legitimate simply because the balance appears in your account.

Why Is Check Fraud Still Growing?

It may seem strange that check fraud is increasing when people are writing fewer checks.

Part of the problem is that checks remain an attractive target.

A stolen check can provide criminals with information that may be used to create additional fraudulent checks. Checks sent through the mail can also be intercepted before reaching their intended recipient.

At the same time, scammers no longer have to rely exclusively on stealing physical checks.

Fake employment advertisements, social media, online marketplaces, text messages and email allow criminals to reach potential victims quickly and incorporate counterfeit checks into much larger scams.

The result is an old payment method being used in very modern fraud schemes.

How to Protect Yourself From Check Fraud

You don't necessarily have to stop using checks, but there are several ways to reduce your risk.

When Writing a Check

Use permanent ink. The U.S. Postal Inspection Service recommends using indelible black ink, which can make a check more difficult to alter.

Fill out the entire check. Avoid leaving large blank spaces before or after the payee name or dollar amount.

Never sign a blank check. A signed check without a completed payee or amount can be especially dangerous if lost or stolen.

Don't include unnecessary personal information. Avoid adding information such as your Social Security number, driver's license number or other sensitive information to a check.

When Mailing a Check

Avoid leaving outgoing checks sitting in an unlocked residential mailbox.

For important payments, consider taking the envelope directly inside a post office or using another secure mailing location. The Postal Inspection Service also recommends promptly retrieving incoming mail and following up when an expected check or other valuable piece of mail does not arrive.

When Receiving a Check

Be especially cautious when receiving a check from someone you do not personally know or from a company you have never worked with before.

If the sender:

• Overpays you
• Asks you to return part of the money
• Wants you to buy gift cards or cryptocurrency
• Tells you which vendor to purchase from
• Pressures you to act immediately
• Claims you've won something you don't remember entering
• Sends money before you've actually performed any work

Treat the situation as a potential scam.

Keep an Eye on Your Connect Accounts

One of the best ways to catch suspicious activity is to pay attention to your accounts.

Use Online Banking or the Connect Credit Union Mobile App to regularly review transactions and account activity rather than waiting for your monthly statement.

If you see a check, withdrawal, or other transaction you don't recognize, contact Connect Credit Union as soon as possible.

If a check you mailed never reaches its destination, don't simply write another one. Review your account first and contact the credit union if you believe the original check may have been lost or stolen.

Think You've Been Targeted? Act Quickly.

If you believe a check has been stolen, altered or fraudulently deposited, or you've deposited a check that you now suspect is fraudulent, contact Connect Credit Union immediately.

Acting quickly may provide more options for protecting your account and investigating what happened.

If mail theft is involved, the incident can also be reported to the U.S. Postal Inspection Service. Fraud and scams can be reported to the Federal Trade Commission.

One Final Rule to Remember

A check can look professional.

It can have a real financial institution's name on it.

The money can even appear in your account.

None of those things automatically prove the check is legitimate.

Whenever someone sends you a check and asks you to send money back, move money somewhere else or make a purchase on their behalf, stop before completing the transaction.

A few minutes of caution could prevent a much bigger financial headache.

Connect Credit Union is here to help you protect your money. If something involving your account doesn't look right, contact us before you act.