Despite the overall adoption of digital payments, paper checks remain a significant target for fraudsters.
Financial institutions are facing increasingly challenging times, with 63% reporting check fraud incidents in 2024. Despite these risks, 91% continue to use checks, and over 75% have no immediate plans to discontinue their use. This ongoing issue highlights the importance of staying vigilant and strengthening fraud prevention efforts.
Counterfeit checks are among the leading contributors to check fraud within financial institutions.
This article will guide you on how to spot counterfeit checks and, most importantly, how to prevent them from impacting your finances.
What are counterfeit checks?
A counterfeit check is a fake version of a legitimate check, made to closely resemble the original in every detail, including the bank logo and security features.
Fraudsters use these checks to deceive recipients and banks into believing they are genuine, thereby allowing them to steal money before the fraud is detected.
Spotting counterfeit checks is key to preventing financial loss, especially as check fraud becomes an increasingly common threat.
In 2024, banks reported over 718,000 suspicious check fraud cases, almost double the number from just three years ago.
How counterfeit check scams work
Most scams follow a familiar pattern that exploits human nature and trust in institutions.
Here's a typical scenario:
- The hook: The scammer reaches out to the victim, often through a job ad, an overpayment offer, or a sweepstakes win. They send a check for more than needed (e.g., payment for a mystery shopper job).
- The delivery: The victim receives the check, usually via FedEx or USPS, often in the form of a cashier's check or business payment.
- The urgency: The fraudster pressures the victim to deposit the check immediately and send back a portion of the money through Zelle, P2P or gift card.
- The fallout: The check is fake. Eventually, the bank catches on, but by then, the victim's real money is gone.
This scam can occur in various settings, including Craigslist rentals, job boards, romance scams, and Facebook Marketplace. The story might change, but the method remains the same.
Counterfeit check scams: Real-world examples
Here are some recent cases that highlight the growing sophistication of counterfeit check scams:
- Columbus, Georgia – $545K Mobile Deposit Scheme (2025): William Chadwick Jones deposited five counterfeit checks totaling $545,770.97 into his business account at Synovus Bank via mobile banking, then transferred the funds through wire services and Zelle.
- Shreveport, Louisiana – $2.1M Bank Fraud: Destane Glass ran a counterfeit check operation from 2021 to 2022, defrauding USAA Bank of $2.1 million. She used insider access to create fake checks and recruit depositors.
- Utah – $3.1M Fraud on U.S. Treasury Checks: A group targeted U.S. banks from 2022 to 2025 by depositing counterfeit, stolen, and altered checks, including U.S. Treasury checks. The scheme resulted in over $3.1 million in fraud, with funds transferred overseas.
These cases reveal the diverse methods of counterfeit check fraud, from insider collusion to large-scale mail theft and online scams targeting individuals.
How to spot counterfeit checks: 11 key warning signs
Counterfeit checks can look remarkably real, but there are often subtle signs that can reveal their fraudulent nature.
Here's how to spot them and protect yourself from scams:
1. Suspicious paper and printing
Counterfeit checks often use low-quality paper and poor printing. If the check feels thin, lacks texture, or has blurry logos and borders, it's likely fake.
How to spot it:
Run your fingers over the paper. Genuine checks should feel sturdy, with high-quality printing that is sharp and clear.
2. Missing security features
Legitimate checks include watermarks, microprinting, and security threads, which help prevent fraud and identity theft. Counterfeits often lack these features or have poorly replicated versions of them.
How to spot it:
Hold the check up to the light to look for a watermark. Use a magnifying glass to check for microprint or holograms that shift when tilted.
3. Errors in bank information
Check the bank's name, address, and routing number. Counterfeit checks often feature slight mismatches in these details.
How to spot it:
Verify the routing number and bank details online to confirm they match the actual bank information.
4. Inconsistent check numbers
In a legitimate check, the check number should match the MICR (Magnetic Ink Character Recognition) number at the bottom of the check.
How to spot it:
Compare the check number at the top with the MICR line. If the numbers don't match, it's likely a counterfeit.
5. Payee name or amount alterations
Look for signs of tampering, like erasures, discoloration, or changes in ink color.
How to spot it:
Hold the check up to the light. If you see faint marks, ghost writing, or ink inconsistencies, it's a red flag.
6. Too good (or strange) to be true context
If you received a check unexpectedly, especially for an amount larger than anticipated, it's likely a scam.
How to spot it:
Be cautious if someone pressures you to deposit a check quickly or asks you to send money back before it clears.
7. Blurry or pixelated logos
Counterfeit checks often have poorly printed logos, making them appear blurry or pixelated.
How to spot it:
Look closely at logos and images. If they appear distorted or uneven, the check may be fake.
8. Altered amounts
If the written amount doesn't match the numerical amount or if there's an obvious alteration, it has likely been tampered with.
How to spot it:
Compare the written amount (in words) with the numeric amount. If they don't match or the check seems altered, investigate further.
9. Unusual spacing or alignment
A counterfeit check may have odd spacing between fields or misaligned text.
How to spot it:
Examine the check's layout. If the text appears cramped or oddly spaced, it could be a counterfeit.
10. Missing contact information
If there's no phone number for the issuing bank or the number provided is incorrect, the check may be counterfeit.
How to spot it:
Look for a phone number on the check. Call the official bank number listed on their website, not the number printed on the check.
11. Suspicious context or pressure
Scammers often create a sense of urgency by pressuring victims to deposit checks and send money quickly.
How to spot it:
If the situation feels rushed or unusual, like receiving a check for something you didn't expect, proceed with caution.
8 effective strategies to prevent counterfeit check fraud in your business
Here are 8 proven strategies to help your bank prevent counterfeit check fraud and safeguard your financial assets:
1. Implement real-time risk scoring
Real-time risk scoring allows for instant evaluation of checks during deposit.
Banks assign a risk score to each check using machine learning and rule-based systems and take action if they flag it as suspicious.
How to implement real-time scoring:
- Work with your bank to enable real-time check evaluation: Utilize fraud detection systems that instantly assess checks upon deposit.
- Set up automatic holds for high-risk checks: Delay the release of funds until the check is verified and confirmed.
- Incorporate machine learning tools: Use AI-powered systems to improve fraud detection accuracy.
Pro tip:
To gain real-time, accurate insights on every check deposit, try CheckDetect. This powerful solution detects over 95% of potential check charge-offs with high precision, enabling you to take prompt action immediately after the deposit.
2. Establish Positive Pay and check controls
Positive Pay is an essential service that enables businesses to prevent counterfeit checks.
It involves sending a list of issued checks to your bank, so only those checks that match the list are honored.
Steps to take:
- Set up Positive Pay with your bank: Share a list of issued checks regularly and update it as necessary.
- Utilize reverse Positive Pay: This checks for discrepancies between issued and presented checks.
- Review and reconcile the flagged checks promptly: Catch any inconsistencies before they result in fraud.
3. Apply behavioral analysis and account profiling
Behavioral analysis allows banks and businesses to identify fraudulent checks by analyzing patterns of account activity.
Using historical data, banks can determine what "normal" behavior looks like and flag any deviations as suspicious.
Steps to use behavioral analysis:
- Monitor account activity for unusual patterns: Look for large deposits from new or dormant accounts.
- Track changes in deposit frequencies: Flag accounts that display sudden, unusual check activity, such as high-value deposits or significant changes in payees.
- Use data analytics tools: Implement tools that track and analyze account activity to detect anomalies automatically.
4. Use high-security check stock
Investing in high-security check paper is one of the best ways to prevent counterfeiting.
High-security checks feature elements such as watermarks, microprinting, and chemical-sensitive ink, making it difficult for fraudsters to replicate or alter the checks.
Best practices:
- Choose checks with advanced security features: Look for checks with at least 20 different security elements.
- Regularly update your check stock: Ensure your check paper is current and incorporates new fraud prevention technologies.
- Store checks securely: Keep check stock in a locked, secure location to reduce the chance of theft or unauthorized access.
5. Incorporate cross-channel and cross-institution intelligence
Fraudsters often attempt to deposit counterfeit checks through multiple channels, such as in-branch, via ATM, or through mobile banking apps.
By integrating fraud data across these different channels, banks and businesses can catch fraudsters before they succeed.
Best practices for cross-channel intelligence:
- Implement cross-channel fraud monitoring: Use integrated systems to monitor deposits across all banking channels.
- Participate in fraud-sharing networks: Join industry consortiums where banks share data about known counterfeit checks and patterns of fraud.
- Use shared fraud databases: Access databases that flag suspicious checks and block them before processing.
6. Reconcile accounts frequently
Regularly reconciling business bank accounts allows you to spot fraudulent transactions before they go unnoticed.
By reviewing your transactions daily or weekly, you can quickly identify discrepancies and report them within the bank's fraud protection window.
How to ensure practical reconciliation:
- Monitor moderate accounts daily or weekly: Don't wait until the month-end to spot potential fraud.
- Review check numbers and amounts: Check for any inconsistencies between what you issued and what is presented.
- Use automated reconciliation tools: Consider using software to streamline and speed up the process.
7. Limit check exposure
Limiting the number of checks your business issues can significantly reduce the risk of fraud.
Whenever possible, encourage customers and vendors to use more secure payment methods, such as ACH transfers or credit card payments, to improve security.
How to reduce check exposure:
- Encourage digital payments: Promote ACH, wire transfers, or credit card payments for B2B transactions. For more insights, check this guide on how to prevent digital payment fraud.
- Implement lower check limits: Set a maximum threshold for checks and process anything above that limit via more secure methods.
- Switch to electronic payroll systems: Move away from paper checks for employee payments to reduce the number of checks issued.
8. Train employees on fraud awareness
Proper employee training is essential for detecting counterfeit checks and avoiding fraud.
Accounts payable staff, as well as anyone who handles checks, should be trained to recognize the warning signs of counterfeit checks.
Employee training tips:
- Conduct fraud awareness sessions regularly: Keep staff updated on the latest fraud schemes and techniques.
- Use real-life simulations: Simulate fraud scenarios to help employees learn how to react in real-life situations.
- Provide easy-to-follow guides: Offer employees reference materials on how to identify counterfeit checks, including key indicators that can help them recognize them.
How VALID Systems assists banks in preventing counterfeit check fraud
VALID Systems is a leader in AI-powered fraud prevention, providing innovative solutions designed to tackle evolving threats, such as counterfeit check fraud.
Leading banks such as PNC, TD Bank, and Truist trust VALID Systems to safeguard their operations from fraud.
With decades of experience, VALID Systems combines deep industry expertise with cutting-edge AI technology, making sure your institution stays ahead of increasingly sophisticated fraud tactics.
Our seamless integration and real-time insights allow your organization to respond quickly, reduce risks, and maintain customer trust in an ever-changing landscape.
Essential VALID Solutions to fight counterfeit check fraud:
CheckDetect - Stop fraud before it happens:
This feature identifies up to 75% of potential check deposit charge-offs at the point of presentment, helping your bank prevent counterfeit checks from being processed and minimizing financial losses.
INclearing Loss Alerts - Catch what others miss:
INclearing Loss Alerts uses machine learning to detect fraud patterns that other systems might overlook, giving you an extra layer of protection against sophisticated fraud attempts.
Edge Check Data Consortium - Predictive fraud detection at scale:
With access to data from over 420 million accounts and $6 trillion in processed checks annually, VALID Edge provides predictive insights that help spot emerging fraud trends before they become a problem.
Ready to stay ahead of counterfeit check fraud?
Book a free consultation with VALID Systems today to discover how our AI-driven solutions can help your bank identify and stop counterfeit checks before they cause harm.