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AML/CFT Financial Crime Financial Elder Abuse SAR Fraud Prevention Check Fraud Fraud Trends

Holiday check fraud: Protecting customers and financial institutions

Mary Ellen Biery
December 2, 2024
Read Time: 0 min

This article covers these key topics: 

Check fraud risks during the holiday season

Holiday check fraud puts financial institutions and their customers or members at risk. Education, collaboration, and advanced fraud detection software can help prevent it. 

Checks in the mail: A holiday gift for thieves

As sure as Santa visits millions of homes on Christmas Eve, holiday check fraud will find its way into banks and credit unions during the festive season.

The surge in mail and financial transactions, distractions, and hectic days create the perfect setting for crooks to put both customers and financial institutions at risk. However, with proactive measures, education, and collaboration, financial institutions can help ensure a season of joy rather than frustration for their customers.

The AML/CFT Officer or fraud officer plays a crucial role in any financial institution efforts to fight check fraud. By implementing robust policies and utilizing advanced software to detect check fraud, these officers can significantly impact their community. Their efforts to educate customers and staff not only protect individuals but also foster a safer financial environment for everyone.

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The risks of check fraud rise around Christmas

The U.S. Postal Inspection Service recently said that mail and packages can be stolen anytime, but thieves especially target the holiday season. This makes sense, given that many people still mail checks as holiday gifts.

Marydith J. Newman, a Postal Inspector in Northern Virginia for the federal law enforcement arm of the U.S. Postal Service, said during a recent Abrigo webinar that postal inspectors have seen a rise in check theft since the end of the pandemic.

“It is very easy to counterfeit checks and to cash checks,” she said. “What we're seeing is a lot of people are transitioning away from their narcotics trade and other sorts of financial crimes because check cashing is much easier.”

Indeed, between late February 2023 and late August 2023 alone, FinCEN received 15,417 reports representing $688 million in transactions related to mail theft-related check fraud.

Data from Abrigo underscores the challenges facing financial institutions and their customers. Among financial institutions attending Abrigo’s July webinar on fraud, 60% reported that check fraud has continued to increase in 2024.

The 2024 Abrigo Fraud Survey found that 61% of Americans still write checks. Nearly half (45%) of respondents reported being a victim of financial fraud, and 17% of that group reported experiencing check fraud in particular.

Evolving tactics by check fraudsters

While check fraud is not new, the tactics thieves will be using this holiday season are different from those in past years. They’ve evolved.

Newman said the Postal Inspection Service has found that fraudsters are getting more sophisticated and brazen than they were a few years ago. In the past, stolen checks would often range from $1,000 to $3,000, and fraudsters would typically recruit homeless people or people on social media to cash them. Now, thieves are increasingly using mobile deposit and recruiting check cashers via Telegram. The checks being cashed are between $5,000 and $75,000.

The postal service, she noted, is taking several actions to combat the theft of checks and other mail, including:

  • Installing more-secure blue collection boxes
  • Tracking down thieves who organize break-ins at postal facilities or rob postal workers of mailbox keys
  • Requiring a dual-authentication process in order to execute a change of mailing address
  • Implementing new technology.

Nevertheless, the holidays amplify the issues, with heightened risks for financial institutions and their customers. This can result in a higher volume of stolen or fraudulent checks, increased customer complaints, and the potential for significant losses to both account holders and financial institutions.

Educating customers to prevent loss from holiday fraud

Financial institutions can help their customers or members play a critical role in reducing holiday check fraud by educating them about safer practices.

One of the most important tips banks and credit unions can relay to their clients is to avoid using home or business mailboxes to leave outgoing checks for the letter carrier. The raised red flag, of course, alerts not only the carrier of a pickup but also crooks. 

“When that red flag goes up…thieves drive through these neighborhoods, and they literally just pull all the mail out of these mailboxes,” Newman said.

Additional tips for customers or members include:

  • Avoid using unsecured mailboxes or blue collection boxes. Newman advised mailing checks directly inside the post office to prevent theft.
  • Be alert for evidence that someone didn’t receive a mailed-out check payment.
  • Confirm with intended recipients that they received a check that was mailed.
  • Transition to online bill pay or electronic transfers, which are more secure and convenient.

Several banks and credit unions are already sharing tips with customers and members that can help thwart holiday check fraud and other scams. For example, Western Bank in Texas suggests customers set up alerts for transactions over a certain amount. Other ideas include not cashing any check that wasn’t expected and regularly reviewing financial activity for unauthorized transactions to flag them early.

Reminding banking staff of check fraud red flags

FinCEN also has provided the following red flags for financial institutions to detect, prevent, and report suspicious activity tied to mail theft-related check fraud. Financial institutions can remind all staff of the following check fraud red flags to reduce the likelihood that stolen checks around the holiday are successfully cashed:

  1. A customer’s account has unusually large amounts of money withdrawn via checks made out to someone new.
  2. A customer says their check was stolen from the mail and then deposited into a bank account they don’t know.
  3. A customer reports that a check they sent never reached the person they mailed it to.
  4. The checks used to take money out of a customer’s account look noticeably different from the customer’s regular checks or those issued by the bank.
  5. A customer who has never deposited checks before suddenly starts depositing checks and quickly withdraws or transfers the money.
  6. An account has sudden, unusual deposits of checks (often made online), followed by rapid withdrawals or money transfers.
  7. Checks being used have faded handwriting under darker handwriting, making it look like someone overwrote the original text.
  8. A suspicious account shows signs of other fraud, like scams tied to pandemic relief funds.
  9. A new customer opens a bank account that seems to be used only for check deposits followed by frequent withdrawals or money transfers.
  10. A person who isn’t a customer tries to cash a large check (or multiple large checks) in person and gives a sketchy or suspicious reason when the bank asks questions.

Suspicious Activity Reports (SARs) are another valuable tool for catching check fraudsters. Newman from the Postal Inspection Service stressed their importance. “My financial analyst here is constantly reviewing SARs, so please keep filing them,” she said. “They’re very helpful.”

Leveraging fraud detection technology

Proactive check fraud detection is essential for financial institutions during the holidays and beyond. About two-thirds of the Abrigo webinar attendees said their institutions already use automated fraud detection software. Being able to quickly analyze dozens of distinct check attributes helps detect fraud faster, which can save financial institutions substantial sums. “A bank of our size doesn’t have deep pockets to absorb fraud losses consistently,” noted Freddie Deutsch, Executive Vice President of Signature Bank of Georgia, an Abrigo customer. “People often underestimate the likelihood of it happening to them, but when it does, they’ll wish they had invested in better defenses.” Pairing technology with manual reviews, which most webinar attendees said they do, can be even more effective.

Collaboration and Reporting Are Key

Financial institutions don’t have to tackle fraud alone. Work with law enforcement agencies in your area to improve response times and outcomes. Newman highlighted her work with financial institutions in Virginia through the Newport News Financial Crimes Task Force, encouraging other banks and credit unions to reach out to law enforcement partners. “I get calls or emails constantly from … folks on my [distribution] list reporting like, ‘Hey, this is happening to one of our clients. Can you please assist them?’” As Newman said, “We’re here to support financial institutions and frankly to stop the check fraud and the mail theft.” Financial institutions should also report incidents of check theft to the U.S. Postal Inspection Service, either on behalf of customers or by guiding them through the process, Newman said.

Protecting the Holidays

Holiday check fraud doesn’t just hurt customers—it also damages the reputation of financial institutions. By educating customers and employees, leveraging technology, and collaborating with law enforcement and other partners like the U.S. Postal Inspection Service, banks and credit unions can mitigate these risks and ensure a safer season for everyone. Acting now will help protect customers and institutions from the costly effects of fraud during the holidays and beyond.
This blog was developed with the assistance of ChatGPT, an AI large language model, and was reviewed and revised by Abrigo's subject-matter expert.

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About the Author

Mary Ellen Biery

Senior Strategist & Content Manager
Mary Ellen Biery is Senior Strategist & Content Manager at Abrigo, where she works with advisors and other experts to develop whitepapers, original research, and other resources that help financial institutions drive growth and manage risk. A former equities reporter for Dow Jones Newswires whose work has been published in

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Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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