Check fraud encompasses all fraudulent schemes involving checks, such as, forgery, theft, counterfeiting, alteration, and more. Checks are susceptible to fraud because of the ease of physical access and alteration. Increasing check fraud is motivating corporate treasurers to transition away from checks and switch to the use of electronic payments. According to a recent article in The Wall Street Journal, potential losses from attempted check fraud rose to $15.1 billion in 2018-an increase of approximately 78% from the $8.5 billion reported in 2016, while successful check fraud resulted in losses of $1.3 billion in 2018, up approximately 65% from $789 million in 2016. The article reveals that even though business-to-business payments via check decreased in 2019 to 42% from 81% in 2004, checks are still documented as the most popular payment method for U.S. businesses.
Check fraud is particularly common in smaller businesses, which are those with less than 100 employees. According to the Association of Certified Fraud Examiners (ACFE) Report to the Nations released in 2018, 22% of fraud cases reported by smaller organizations involved check tempering, compared to only 8% for larger organizations.
Moreover, The Wall Street Journal article reported that companies with less than $1 billion in annual revenue are more likely to continue using checks, rather than switching to electronic payments. The lack of financial resources available to invest in new information technology systems necessary to process electronic payments is noted as a large factor in remaining dependent on physical checks. Data reconciliation can be another administrative burden for some companies, as well as the integration of new payment tools. Banks, however, continue to introduce and improve such tools, some of which include artificial intelligence and robotics to reconcile payments.
The transition away from checks, like any other significant business process change, will take time, but it is anticipated that businesses will be trending away from checks and towards the use of electronic payment tools.
To learn more about Aronson’s fraud investigation capabilities, or if you feel that your organization may be the victim of a fraud, contact Brittany Garver at 240.364.2607 or Bill Foote at 301.231.6299.
 Trentmann, Nina. “Rise in Check Fraud Could Motivate Treasurers to Switch to Other Payment Tools”. The Wall Street Journal, 15 Jan. 2020.