Knowing how to spot altered checks is critical for anyone handling financial transactions, because paper checks are still around despite the rise of digital payments.
While checks may seem outdated, fraudsters find new, increasingly subtle ways to exploit them.
This guide breaks down the tactics used by fraudsters, the red flags you need to watch for, and the tools that leading financial institutions are using to stop altered checks before they clear and prevent costly fraud before it happens.
An altered check is a real check that has been fraudulently modified after it was issued. Common alterations include changing the check amount or the payee's name to redirect funds or increase the payout.
Somehow, someone altered the check, throwing off your entire financial record.
An altered check is simply a real check that's been tampered with by someone other than the original writer. The most common tricks include changing the amount, like adding an extra zero or altering the payee's name.
It's a type of check fraud in which the check begins as legitimate but gets hijacked and changed after it's written. This differs from counterfeit checks, which are entirely fake from the start.
Altered checks can easily go undetected, especially when someone makes changes that blend in with the original writing.
The tricky part is that these checks still look real at first glance and are more difficult to detect.
According to the Uniform Commercial Code (UCC) Section 3-407, liability can fall on various parties:
The longer you wait to spot the fraud, the harder it is to recover your funds.
Every check contains critical details, but altered checks often leave subtle red flags that can go unnoticed.
Here's how to identify those warning signs and protect yourself from fraud:
If the handwriting or fonts differ between check sections, especially between the payee name, the amount, or the date, it suggests tampering. Fraudsters often use different writing styles or fonts to change details.
Compare the handwriting or font used in the payee name and the amount fields. If they don't match, it's worth questioning. Pay attention to variations in slant, size, and neatness between fields.
Fraudsters frequently use erasers, correction fluid, or chemicals to alter the check's details. You might notice faint marks, smudging, or blurry or faded areas.
Hold the check up to the light. When you spot ghost images, traces of previous writing, or uneven ink, you're likely looking at an altered check.
If the check uses different ink colors or pens in various fields, it's a sign of tampering. A common trick is using one color for the amount and a different one for the payee's name.
Look for inconsistencies in the ink's thickness, sheen, or color. If the ink in one area looks newer or shinier than the rest of the check, it's worth investigating.
Fraudsters need space to alter checks. The check might have been tampered with if there are large blank spaces after the payee's name or amount, or if the text is misaligned or squeezed in.
Check the spacing between text fields. If the alignment feels off or there's huge empty space, it could be a sign that someone added or altered text after the check was written.
This is a major indicator if the written amount doesn't match the numerical amount or if one seems altered. Fraudsters often change either the number written in words or the numeric value to inflate the check's worth.
Always compare the written amount (in words) with the numerical amount. If they don't match exactly or one seems off, investigate further.
Modern checks include watermarks, microprinting, and security threads to prevent fraud. The check may have been tampered with if these features are missing, faded, or altered.
Hold the check up to a light to see if any watermarks appear. Check for microprinting and security threads embedded in the check. If they're missing or look faded, it's a red flag.
Banks and legitimate issuers print authentic checks on thick, high-quality paper that resists wear and tear. However, it could signify fraud if the paper feels flimsy, cheap, or inconsistent with other checks.
Compare the check's paper quality with others you've written. It may be altered or counterfeit if it feels thin, is textured differently, or is unusually soft.
The Magnetic Ink Character Recognition (MICR) line containing routing and account numbers should match the check number at the top right corner. A mismatch often signals that someone has altered the check.
Pay close attention to the MICR line at the bottom of the check. If the numbers don't align with the check number in the top right corner, it's likely an altered check.
Blurry or pixelated logos often indicate that someone used low-quality printing equipment. These distortions commonly appear on checks that have been digitally altered or photocopied.
Inspect the logos and images on the check closely. It could be a counterfeit or altered check if they look fuzzy or pixelated, or if the printing seems uneven.
Fraudsters may insert fake checks into a sequence, causing sudden gaps or jumps in check numbers. Such irregularities often point to an attempt to disguise alterations.
Check the numbering sequence. If there's an unusual gap between checks or a sudden drop in numbers, ask your bank to verify the sequence and investigate further.
Mismatched or forged endorsements often signal that someone has altered the check. Fraudsters usually generate signatures to cash altered checks.
Compare the endorsement on the back of the check with previous signatures from the payee. If the signature doesn't match or seems unusual, it's likely forged.
In business settings, fraudsters may hide altered checks among legitimate ones, hoping they'll be signed without proper inspection.
When signing checks in bulk, take extra care. Review each one thoroughly, especially if they were received or processed quickly. Don't sign checks without double-checking their details, even if it's a routine process.
Preventing altered check fraud is key to protecting your finances. Here's how to stay secure and safeguard your financial interests:
AI and machine learning systems can analyze and check transactions and detect even the most minor alterations that might go unnoticed. These tools allow real-time detection, helping to prevent fraudulent checks before they're processed.
Regular training helps employees recognize altered checks and fraud schemes. Staff with up-to-date knowledge are better prepared to spot tampering or other signs of fraud.
Tip: Conducting phishing simulations helps staff recognize fraudulent attempts and respond effectively. These exercises mimic real-world scenarios, giving employees the experience to spot and handle fraud.
High-security checks include features like watermarks, microprinting, and chemical-sensitive paper, making alterations more visible. These checks are difficult to replicate and offer a strong deterrent against fraud.
Tip: Recommended update frequency for high-security checks:
Real-time decision-making systems allow financial institutions to approve or reject checks based on specific criteria instantly. This reduces the chance of fraudulent checks clearing unnoticed.
Pro Tip: VALID Systems’ Real-Time Loss Alerts (RTLA) enable sub-second fraud detection for check deposits. By flagging altered or suspicious items across all channels, RTLA helps institutions reduce processing time, stop fraud early, and protect customers without slowing down legitimate transactions.
Continuous transaction monitoring detects suspicious activity early and enables swift action to prevent losses. It also reveals unusual patterns that may indicate fraud.
Educating customers on recognizing altered checks and reporting suspicious activities can significantly reduce the likelihood of fraud. Customers play a vital role in fraud prevention.
Secure storage of blank and signed checks prevents tampering or theft. Keeping checks in a locked location reduces the risk of unauthorized access and fraud.
Reviewing bank statements frequently helps individuals and businesses quickly spot discrepancies and take action before significant damage occurs.
Valid Systems is a leading provider of AI-driven fraud prevention solutions designed to combat evolving check fraud threats, including altered check fraud.
Leading financial institutions like PNC, TD Bank, and Truist trust Valid Systems for a reason.
With over two decades of experience, Valid blends deep industry knowledge with cutting-edge AI technology to prevent fraud that keeps pace with evolving threats.
Through seamless integration and real-time insights, Valid enables your organization to act swiftly, reduce risks, and maintain customer trust.
A closer look at our most trusted tools.
Real-Time Loss Alerts (RTLA©) identify up to 75% of check deposit charge-offs at the point of presentment. This allows banks to stop altered check fraud before releasing funds, minimizing losses and operational disruption.
INclearing Loss Alerts utilize machine learning to uncover fraud patterns that other systems miss. This approach is especially practical for detecting sophisticated alterations.
The VALID Edge Check Data Consortium offers access to data from over 420 million accounts and $6 trillion in processed checks annually. Such a vast, anonymized data network allows predictive fraud detection by identifying patterns typical of altered check attempts.
Do you want to know how to spot altered checks and avoid check fraud?
Book your free consultation with Valid Systems to learn how our advanced technology can help you prevent altered check fraud before it starts.