Two groups remain loyal to the paper check: American businessmen and crooks.
Dead-tree checks remain the preferred mode of payment for half of U.S. businesses, The Wall Street Journal reported this week. Fraudsters bank on this fact: Checks were the target in 87 percent of attempted or actual business payment frauds in 2012, according to a survey by the Association for Financial Professionals.
“When I did this almost 50 years ago, I needed a Heidelberg printing press,” said Frank Abagnale, a con man-turned-consultant who spent his teenage years posing as a pilot, attorney, professor and pediatrician, and who was portrayed by Leonardo DiCaprio in the film “Catch Me If You Can.” “Today, someone opens a laptop, picks a victim.”
Abagnale wrote $2.5 million in fake checks while laboring over a 90-foot long by 18-foot wide machine and tinkering with negatives and chemicals. The modern process is much simpler: Google a company’s logo, scan it onto a check diagram and print it out on fancy paper at your local Staples or Office Depot. Call a company and pretend you need to wire them money for a service to collect their banking information, and find a copy of their annual report online and mimic or scan the CEO’s signature.
While 87 percent of the payment frauds in 2012 involved checks, just 16 percent of businesses lost money from those cases because the fraud was caught in time. Those instances accounted for the companies’ biggest financial losses from payment fraud that year, according to the Association for Financial Professionals survey.
“A majority of attempted or actual check fraud events involve counterfeit checks. In some cases, a company check falls into the hands of a fraudster who then creates a false check using the [magnetic ink character recognition] line from a corporate bank account,” the study reads.
Almost half the businesses that were victims of such payment schemes said the check fraud involved a change of the payee’s name. Counterfeit checks with fake names or that included another company’s information were reported by 29 percent of the organizations.
In the U.S., both consumers and businesses have been loosening their grips on the old-fashioned checkbook for the last decade. Twenty-one billion checks were written in the U.S. in 2012, a 44 percent drop since 2003, according to a Federal Reserve study released in December.
The average value per paper check paid was $1,420, according to the Federal Reserve study.
Businesses are taking longer to adopt electronic payments. Paper checks accounted for 50 percent of sent and received business bills in 2013, though that’s down from 74 percent in 2007, according to the Association for Financial Professionals.
Only one in five organizations makes a majority of payments via electronic means, and less than half of the survey’s participants said they’ll move away from checks to pay the majority of their biggest bills in the next three years.
Companies have invested billions in check-sorting technology, further postponing the inevitable move toward electronic payments, Abagnale said.
“My wife owns a small retail store in Charleston, South Carolina, and she still writes checks,” he said. “There’s always going to be those businesses.”
Large businesses were twice as likely to lose money through check fraud than small businesses, with 19 percent incurring losses.
Consumers can also fall victim to check fraud — for criminals, it’s as simple as changing the name in the corner, experts say. And there’s not much individuals can do to protect themselves beyond keeping tabs on their accounts.
“The advice that we always give people is that you must check your credit and bank accounts on a daily basis to make absolutely sure that everything looks right,” said Adam Levin, founder of Credit.com.
Priya Anand is MarketWatch's consumer fraud reporter. She is based in New York. You can follow Priya on Twitter @PriyasIdeas. This article originally appeared on MarketWatch.com and is reprinted by permission from Marketwatch.com, ©2014 Dow Jones & Co. Inc. All rights reserved.