Check Fraud

Forged cheques followed the first English cheques of the 1600s; in the US the first notorious modern corporate case was E.F. Hutton, which pleaded guilty in 1985 to 2,000 counts of mail and wire fraud over a systematic overdraft-and-kiting scheme.

Cheques developed from bills of exchange and were in use in England by the 17th century (a surviving cheque dates from 1659), and forged or altered cheques followed almost immediately. In the US, check forgery, 'paper hanging' (writing bad checks) and check kiting - exploiting the float between banks - were staple frauds through the 20th century; the investment bank E.F. Hutton pleaded guilty in 1985 to 2,000 counts over a kiting-style overdraft scheme, and Frank Abagnale's widely publicised (and partly disputed) story made check forgery famous. Desktop publishing in the 1990s made counterfeit checks easy, and remote deposit by phone added new tricks. Since about 2020 US check fraud has surged again, driven by checks stolen from the mail and 'washed' or altered, and by counterfeit checks sold on social media and messaging apps.

Fraudsters steal real checks - often from mailboxes - and chemically 'wash' or alter the payee and amount, or copy the account details onto counterfeit checks. They deposit them into accounts they control or recruit 'money mules' to do so, then withdraw cash before the bank discovers the check is bad. Related scams send victims a fake check for more than they are owed and ask them to wire back the difference before it bounces. Kiting moves money between accounts at different banks to create a false balance during clearing delays.

It needs only a stolen or washed cheque and a mule account, and mail theft gives an easy supply: FinCEN recorded over 680,000 check-fraud suspicious activity reports in 2022, nearly double 2021. It persists because the US still writes billions of cheques a year and banks make funds available before a cheque clears, so the money is often withdrawn before the forgery is spotted. Individual cases are small and hard to trace, so prosecution focuses on organised mail-theft rings.

US banks filed 680,000+ check-fraud SARs in 2022 (FinCEN, Feb 2023), FinCEN counted $688 million in suspicious activity tied to mail-theft check fraud in the six months after its alert (Sept 2024), and the FBI logged $282.7 million in credit-card and check-fraud losses in 2025. Individual rings such as Charlie Banks Green Jr.'s ($10 million) show the scale; historically E.F. Hutton's kiting scheme moved billions of dollars a day in float. Victims are often small businesses and retirees whose mailed cheques are stolen and altered.