Check usage may decline, but fraud continues to rise, and the schemes are becoming increasingly sophisticated. In 2024, 63% of organizations reported experiencing check fraud (AFP Payments Fraud Survey), with total losses exceeding $21 billion.
For banks, knowing how to verify a check has become a first line of defense.
Visual checks and static rules are no longer enough – verification now requires real-time, data-driven analysis.
This guide breaks down the verification process step by step and highlights key red flags to protect funds without compromising speed or customer trust.
Check verification is the process of confirming that a check is legitimate, clears as expected, and is not a scam.
In practice, this means verifying that the check isn't counterfeit or altered, that the account it's drawn on is valid, and that sufficient funds are available.
This verification is a proactive step to detect fake or fraudulent checks before they cause damage through fees or financial losses.
These two terms often get confused, but they have very different purposes:
In short, verification checks the check, and clearing moves the money.
What does a thorough check verification actually look like in practice?
Below is a five-step process that incorporates both traditional precautions and modern tech to vet a check:
Start with a simple visual and touch-based inspection. A careful examination often reveals fake checks immediately.
If a check is missing a watermark, has a fake-looking logo, or feels like plain printer paper, it's likely a counterfeit.
What to look for:
Also, double-check:
After inspecting the physical check, confirm that it was issued by a legitimate bank and that the funds were actually drawn.
Step-by-step for bank teams:
Contact the bank and request a verification. You'll usually need:
Depending on their policy, the bank may confirm:
For cashier's or official checks:
Key considerations for banks:
This step is about context – making sure the story around the check makes sense.
If you're a teller or fraud analyst, review the customer's account history to identify any potential issues.
Ask yourself:
Always verify the identity of the person depositing or cashing the check. If it's in person, ask for identification and compare the signature to the one on the check or on file (especially for two-party checks).
Also, trust your instincts. If the customer doesn't fully understand why they got the check, or says someone told them to deposit it and send money elsewhere, something's probably wrong.
For businesses, confirm the check matches an actual transaction. If a new client sends a check for more than the invoice and asks for a refund of the difference, it's almost certainly a scam.
In short:
Know who the check is from, why it was issued, and if the situation makes sense. If it doesn't – pause and investigate.
Modern check verification platforms use AI, real-time analytics, and machine learning to evaluate each check as it enters the system. When properly deployed, these tools reduce fraud, minimize holds for legitimate customers, and relieve staff from the burden of guesswork.
Here's how a fully automated, multi-layered check verification system works:
Fraud detection systems begin by verifying the account from which the check originated.
Is it active? Has it been flagged for fraud? Is there a history of bounced or returned items?
Advanced platforms go further by analyzing behavioral context – how that account typically behaves.
For example, VALID's InteliFUNDS© powers this layer by evaluating deposit behavior in real-time. It doesn't just ask, "Is this account open?". It asks, "Is this check consistent with the way this account normally operates?" That distinction is crucial when identifying fraud associated with mule accounts or newly hijacked ones.
Modern tools use AI to compare the check's signature with known samples from the account holder.
Fraudsters may alter the payee or amount using graphic software or paste scanned elements from other checks to create realistic forgeries. Human reviewers often miss these signs, especially when under pressure to process transactions quickly.
Modern systems can check images using computer vision and deep learning to spot:
Every check has a different risk profile. A payroll check from a known employer carries far less risk than a large, out-of-pattern deposit from a new account.
Instead of using one-size-fits-all rules, modern systems score each check based on context.
Key scoring factors include:
Recommended approach:
VALID's InstantFUNDS© assigns a real-time risk score to every deposit and applies dynamic hold policies automatically. Banks clear low-risk checks more quickly, providing customers with a smoother experience. Risky ones are flagged, delayed, or routed for escalation without teller intervention.
Traditional Positive Pay systems match incoming checks against a list of issued ones (check number, payee, amount). It's effective but static.
Fraudsters have adapted by producing checks that technically "match" the list but still signal deeper anomalies – like unusual timing, mismatched behavior patterns, or excessive use of a specific check range.
For better results:
VALID enhances Positive Pay by adding behavioral fraud scoring and contextual risk layers. Instead of just saying, "This check matches," VALID asks, "Should this check match, given everything else we know?"
This approach reduces both false positives and missed threats, and allows Positive Pay to evolve from a rule-based tool into a real-time fraud defense system.
Even the best systems can't block every threat. That's why timing matters. Fraud teams need to know as soon as a risky check hits the system, not after the fact when funds are already gone.
Best practice:
VALID's Real-Time Loss Alerts (RTLA)© closes this gap. It instantly notifies your fraud or risk team the moment a deposit matches high-risk fraud patterns based on live signals, not batch reports.
After verifying all the details, it's time to make a decision. Your next step depends on what you've uncovered throughout the verification process. There are three possible actions:
Proceed with the deposit when:
In this case, your team processes the check as normal and releases the funds according to your institution's availability policy.
Sometimes, even a verified check requires a temporary hold, especially if something appears slightly off. Common reasons to place a hold include:
Use your Reg CC guidelines to determine the appropriate hold period. If you're unsure, escalate the decision to a supervisor or fraud specialist.
If the check raises serious concerns, rejecting it is the safest option. You should reject when:
If you've already accepted the deposit, reverse it and clearly explain the situation to the customer.
In the fight against check fraud and the quest for seamless verification, VALID Systems has positioned itself as a leader and innovator.
VALID Systems understands the pain points that banks face in 2025 – and has developed solutions that directly address those challenges.
Here's why VALID stands out as a partner for modern check verification:
Proven track record:
We've spent over 20 years focused on preventing check fraud and ensuring funds availability, testing our solutions through every wave of fraud evolution. Leading financial institutions, including PNC, TD, and Truist, trust us to protect their check operations.
Each year, VALID System processes more than $4 trillion in check volume, and banks rely on us because we deliver scale, accuracy, and proven results.
We back our risk decisions with a guarantee. If a check we approve turns out to be fraudulent and results in a loss, we cover it – no fine print. This level of financial backing is rare in the industry, demonstrating our confidence in our analytics. It also means we share risk with you, so we're invested in every outcome.
Our tools make sub-second decisions, powered by machine learning trained on vast amounts of fraud data. InstantFUNDS© delivers immediate funds availability for low-risk checks, while RTLA© (Real-Time Loss Alerts) flags high-risk deposits across all channels before the fraud settles. We combine speed and precision to help you act faster, and smarter.
Our systems don't just rely on static rules – they learn from behavior. INclearing Loss Alerts monitor account activity and flag changes that signal potential fraud, such as sudden spikes in check volume, new geographic locations, or unusual timing. This approach helps prevent mule deposits, insider abuse, and check-kiting before they become losses.
Looking to upgrade your check verification process in 2025?
Let VALID Systems demonstrate how real-time AI can minimize exposure while improving the customer experience.