The Check Fraud Pipeline Starts Online

Paper checks haven’t gone away, and that lingering low-tech habit is colliding with near-ubiquitous smartphones and constant online engagement—giving fraudsters more ways to exploit unguarded data. The picture is pretty clear: check fraud is surging, social media is an accelerant, and the weak spots span customers, frontline staff, and back-office controls. Here’s what to watch:

The threat is growing fast—and it’s not just theory. FinCEN’s suspicious activity reports tied to check fraud have surged in recent years largely due to mail theft rings. In 2024, there were 682,276 reported check-fraud SARs, up from 350,000 in 2021—roughly 1,900 reports a day.

Social media is a “great outlet” for access—and for manipulation. “Financial criminals have been using social engineering in various ways for many years whether it’s personally identifiable information (PII) or flat-out seeking bank account information,” said Staci Shatsoff, assistant vice president of payments improvement at Federal Reserve Financial Services, speaking during a ProSight discussion on check fraud. “And social media is a great outlet for this access.” Fraudsters may leverage oversharing (public posts that reveal personal details), pop-ups on commercial sites, friendly or romantic manipulation, illegitimate offers, and fake sweepstakes to obtain account and routing details they can later exploit.

Why some losses become especially hard to unwind. John Fick, director and head of fraud at Northwest Bank, described scenarios where victims are pressured into sharing a legitimate check form, handing over account and routing numbers. “For the banking industry, and when it comes to educating our customers, this makes it a bit more challenging,” Fick said. In these scenarios, the customer may have provided legitimate check information. “It’s going to be a straight loss for the customer; it’s a document that’s not forged, it’s not altered. It may be too late to retrieve that item and negotiate,” Fick added.

What to do about it: a practical checklist.

• Start with education and better conversations. Experts stress education, transparency, and communication, including training staff on sensitivity and empowerment. The Federal Reserve’s Check Fraud Mitigation Toolkit is a resource for a customer segment that needs more education.
• Share intel—because fraudsters do. Criminals exploit communication gaps across institutions; consortia data linkages and shared red flags can expose patterns faster, including through groups such as the ProSight Fraud Alert Network (ProSight members receive one year of complimentary access).
• Tighten approvals with Positive Pay options. Payee Positive Pay, Check Positive Pay, and Reverse Positive Pay are tools that can reduce exposure.
• Modernize verification without losing judgment. Suggested upgrades include AI-powered OCR (optical character recognition), but the bigger point is balance: use technology to reduce manual work while keeping room for context-based calls tied to customer history and the type of check.

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