Check fraud remains a major threat for financial institutions of all sizes. In 2025 alone, Nasdaq Verafin caught over $1 billion in check fraud across the check lifecycle, as criminals continue to exploit blind spots in legacy detection capabilities.
New findings from Nasdaq Verafin’s consortium data network of more than 2,700 financial institutions show that over the last year, instances of check fraud increased 11%, despite the total number of transactions involving checks decreasing 7% over the same period.
“Check fraud has remained a thorn in the side of financial institutions for centuries. Today, criminals have taken advantage of the fragmented nature of detection capabilities, using increasingly sophisticated tactics to avoid detection by siloed systems.”
– Colin Parsons, Head of Fraud
In addition, evidence shows that in 2025, consumers have been writing larger checks when compared to 2024. Exploiting this legacy payment channel has become a low-risk, high-reward scheme for criminals, as shown by the continued growth of fraud despite declining use of actual checks. The latest surge in check fraud cases underscores the significant challenges that financial institutions face as criminals increasingly leverage harder-to-detect forms of check fraud.
Understanding Check Fraud Typologies
Check fraud is complex, with numerous typologies demanding vigilance from financial institutions. Many financial institutions use point solutions for detection, resulting in an overwhelming volume of false positives. Meanwhile, sophisticated criminal tactics now require financial institutions to assess all possible risk factors together to catch instances of fraud.
Recently, we published an eBook covering some of the most common and hardest to detect scams. These include:
Counterfeit Checks, where fraudsters create a fake check that looks legitimate, using an existing account number, routing number, and signature style of the authorized signer. Key risk indicators for fraud investigators include:
- Poor quality printing
- Missing or altered security features
- MICR line mismatches
Altered Checks, where a legitimate check is stolen by a bad actor, who then alters the name and/or payment amount on the check. Key risk indicators for fraud investigators include:
- Inflated payment amount
- Uncharacteristic payee
- First-time payee account activity
Fraudulent Endorsement, where a legitimate check is stolen from the mail and deposited with a forged signature. Key risk indicators for fraud investigators include:
- First-time payee account activity
- First-time deposits to a new account
- Signature inconsistencies
- Endorsement irregularities, such as missing or incorrect dates
A Holistic Approach to Solve All Forms of Check Fraud
The proliferation of harder to detect forms of check fraud, such as altered checks, high quality counterfeits, and fraudulent endorsements, requires collaboration between financial institutions on both the depository and in-clearing sides of transactions to prevent. Siloed approaches to detection are ineffective, offering only a single-sided view of a transaction that omits key evidence that can inform risk.
“Check fraud is a challenge for financial institutions because there is an imbalance of information. The problem can only be solved effectively by understanding the full picture of a check’s journey, from deposit to clearing.”
– Colin Parsons, Head of Fraud
Nasdaq Verafin’s holistic Check Fraud solution helps financial institutions combat the continued rise in check fraud, leveraging real-time deposit fraud detection, consortium analytics, and machine learning capabilities to uncover the full picture of check fraud risk.
The comprehensive check fraud solution also combines image, behavioral, and counterparty analysis, using consortium analytics to link deposit risk in the Nasdaq Verafin cloud to the in-clearing check.
This collaborative approach to fighting check fraud allows the deposit-side institution to immediately place a hold in instances of potential fraud. The in-clearing bank is then able to quickly investigate and confirm instances of fraud by analyzing data from more than 800 million counterparties in Nasdaq Verafin’s consortium, returning the check to the deposit-side institution within the required clearing time.
To learn more, visit: https://verafin.com/solution/check-fraud/.
