Paper checks open the door for unscrupulous actors to clear out a check-writer’s account, and even the Automated Clearing House says that people shouldn’t use them, according to an article in Fusion.
It turns out, however, that you probably shouldn’t write checks of your own – even if you have a checking account. The organization in charge of processing check payments says so explicitly: “stop using paper checks,” they wrote, in a statement to Fusion.
Paper checks have always carried risks for users. Forged signatures, forged endorsements, counterfeit checks, altered checks, check kiting, and check washing are forms of fraud that still exist today. However, before the age of near universal access to electronic payments, check fraud took some work, and even artistry. Now, all someone needs is the numbers from the front of the check to get funds from the account, as evidenced by the author’s coworker using his account and routing numbers to pay her own credit card bill.
The availability of p-to-p products and electronic payments will continue to reduce the need for checks, but paper checks will continue to hang on until these products are universally adopted.
Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group
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