Are checks a secure form of payment?Personal checks are a form of payment that’s at least as old as the 11th century, with the modern version tracing its name and origins to English bankers in the 18th century. While the check has gone through many updates throughout history, in a lot of respects, it remains the same, making it an insecure form of payment in the face of the 21st century. Since Internet scams and identity theft are so common today, is it finally time to retire your checkbook? We discuss the risks of using checks in this day and age.

What are the potential problems associated with check payments?

Personal checks have always been an easy method for fraudsters to take advantage of, given that they’re essentially tiny strips of paper that allows someone to have access to another person’s money. While there have been security functions added as they modernized, such as an authorizing signature and requiring writers to spell out the cash value written on the check, these are relatively weak and have been broken before. Unfortunately, as technology continues to develop, check security is getting weaker – in today’s digital age these things can be counterfeited or edited with ease. What’s worse, scammers are finding new ways to commit check fraud that can leave both the check issuer and the check depositor on the hook for giving the bank a bad check. Aside from forgery and check kiting, the true weakness of the check lies literally on its front side. Anytime you write a check, you are essentially handing out your bank’s name, routing number and bank account information, which are the keys to your financial kingdom.

How much damage can someone do with my banking information?

While you may be thinking all of your banking information is already living somewhere on the Internet as a result of one of many data breaches, there’s a high chance that only your debit or credit card numbers are out there, which you can easily cancel and reopen. On the other hand, checking account information is not quite as easy to change. That’s because you’ll have to close out your bank account and re-open it, which can mix up any direct deposits you set up for that account as well as any automatic payments you have.

If you think exposed bank account and routing numbers aren’t that detrimental, think again. As proven by Fusion, simply obtaining routing and bank account numbers can be enough to transfer funds to make unauthorized payments to a stranger’s account using an Internet-based financial service, like PayPal, Mint or Betterment, which require this basic banking information for account registration. Another method of making withdrawals using a victim’s routing and bank account numbers is referred to as a demand draft, which is a check issued by banks on your (or a thief’s) behalf. These payments don’t require a signature (they only require authorization through the bank) and as such, are easier to forge — all that’s needed to do so is a bank account number and routing number. It should be noted that there are a number of other ways for fraudsters to take advantage of the information on your check, like creating new checks with your account information and their name or replicating your check and forging your signature to steal your money. We opted to detail some of the modern ways a fraudster can attack using the Internet because not everyone knows about them.

Regardless of the methods fraudsters take, personal checks are proving to be unfit in this day and age. In fact, checks are such an unsafe way to pay that even the National Automated Clearing House Association, the company that processes the majority of paper checks, told Fusion that “the most effective way for consumers to safeguard bank account numbers is to stop using paper checks. Since money transferred electronically passes through fewer hands than a paper check, electronic payments can be a safer option for consumers.”

What are some alternatives to personal checks?

Despite the fact that some security experts discount personal checks as a viable form of payment in the 21st century, it’s obvious that checks play an important role in personal finance. It’s practical to issue a check for larger, in-person or by mail payments, for example. In addition, it can be relatively easier to cancel checks, as opposed to cash, debit card, credit card or some other forms of payments. Luckily, checks have a lot of comparable alternatives. For example, cashier’s checks and money orders are very similar to checks but offer a bit more security since they don’t include all of your banking information. That said, before you hand over a cashier’s check or money order to someone, you’ll want to be sure that whatever you’re paying for is legitimate, as thieves have been known to ask for these forms of payments when they’re scamming victims because they’re not the easiest forms of payment to cancel, especially after they’ve been cashed by a thief. If you can, opt to pay with debit and credit cards, especially EMV equipped ones, because they offer better security than any check and are easy to cancel and reopen in the event of fraud (as we explained above). Of course, though, regardless of what type of payment you use, there will still likely be vulnerabilities. That’s why it’s important for consumers to understand their chosen payment methods and be cautious about how and where they use those methods.

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