Visa Sees Check Fraud Spilling Into Faster Payment Scams

Check fraud has gained prominence as a measurable source of losses for financial institutions, businesses and consumers. Even as digital payment adoption accelerates, paper continues to circulate through the U.S. banking system at extraordinary scale, preserving structural vulnerabilities that criminals increasingly exploit. According to PYMNTS Intelligence, checks accounted for 30% of U.S. fraud losses in 2024, while check payments are 31 times more likely to be fraudulent than real-time transactions.

Why Checks Continue to Circulate

The endurance of checks in the United States stands in contrast to markets where usage has materially declined. Michele Herron, senior vice president, head of North America Value-Added Services at Visa, noted in an interview with PYMNTS that paper payments remain deeply embedded in domestic financial behavior.

“Americans deposit more than 11 billion checks per year,” she said. “They are not the best, most efficient or safest way to be paid.”

Herron attributed the persistence of checks to consumer habits rather than technological limitations. Even individuals who regularly use cards and digital wallets often default to checks for certain categories of transactions, including rent, various bills and gifts.

That reliance ensures that checks remain an active component of the payments mix rather than a fading one.

Fraud Tactics Across Multiple Vectors

Herron described a fraud landscape defined by both technological sophistication and procedural simplicity. Criminals continue to exploit the physical nature of checks while integrating newer tools.

“There are so many different ways that fraudsters are exploiting this issue,” she said. “It could be through counterfeit checks, forging checks and rewriting stolen checks.”

Check washing remains one of the most visible examples. Criminals intercept legitimate instruments, remove original ink and rewrite critical details.

Other schemes rely on persuasion rather than alteration. Victims are induced to write genuine checks under false pretenses, often through scenarios tied to employment opportunities or fabricated financial windfalls.

Fraud, in this sense, spans both document manipulation and social engineering, complicating prevention efforts.

The Clearing Gap and Consumer Exposure

One of the defining characteristics of check fraud is the time lag between deposit and final settlement. Funds may initially appear available, encouraging action before a fraudulent instrument is ultimately rejected.

Herron outlined a common employment-related scheme. A victim receives a check associated with what appears to be legitimate work. Shortly thereafter, the sender claims an error and requests reimbursement through faster payment channels.

“As soon as I get it, they say they overwrote the check and ask for money back,” she told PYMNTS. “I send an electronic payment. Then I am left with the check that does not clear.”

The financial harm becomes visible only after the original check is returned, by which point the fraudster has typically exited the interaction. This delay introduces operational strain for banks and financial risk for consumers who believed they were handling valid transactions.

AI Reshapes Check Manipulation

Artificial intelligence (AI) has altered the mechanics and economics of check fraud. Tasks that once required manual effort can now be executed at scale with greater precision.

“In the past it was painstaking to get the signature right and copy handwriting,” Herron said. “Now with AI, you can do this at scale.”

She emphasized AI’s ability to replicate subtle characteristics that historically distinguished authentic checks from altered ones. “AI can look at nuances in ink patterns, the way numbers are formed, and how space is used,” she said. “It can reach nearly 100% precision.”

Deploying AI for Detection and Prevention

Visa is helping financial institutions with comparable analytical technologies. Herron described how AI-driven systems evaluate both the physical attributes of checks and broader behavioral signals.

“We use highly accurate check image forensics,” she said. “We can detect bleach stains and subtle inconsistencies that indicate the check is not authentic.”

Image analysis alone, however, captures only one dimension of fraud. Herron pointed to adaptive behavioral analytics as a complementary layer possible through Featurespace, a Visa solution, that helps analyze individual customer behavior to identify anomalies that may indicate fraudulent activity.

“Rather than analyzing any situation in isolation, adaptive behavioral analytics creates a profile,” she said. “It constantly builds what normal looks like so we can [better] detect what isn’t normal.”

These models ingest large volumes of transaction data to identify anomalies tied to account activity, payment patterns and usage behavior. The objective is not merely to block suspicious items but to preserve legitimate transaction flow.

“We want as many good transactions [as possible] to go through,” Herron said, adding that Visa helps financial institutions flag suspicious transactions.

A Broader Payments Risk Signal

Check fraud may originate with paper instruments, yet its implications extend well beyond a single payment rail. Fraudulent deposits can trigger rapid withdrawals, mule account activity and cross-channel schemes that affect cards and digital payments alike.

Herron framed checks as one component of a wider payments risk environment.

“Fraud is not limited to one payment type,” she said. “Behaviors observed on checks can inform risk signals across others.”

That perspective reflects an industry shift toward unified fraud management strategies capable of evaluating threats across payment methods rather than within isolated silos.

Check fraud’s resurgence illustrates how legacy payment mechanisms continue to shape modern risk dynamics. Advances in AI have intensified both attack capabilities and defensive responses, placing greater emphasis on behavioral analysis and forensic detection.

“It is a real challenge,” Herron said. “It’s something we are working to combat.”