How to Identify an Altered Check: A Practical Guide to Detecting Check Fraud

Check fraud remains a persistent risk for organizations of all sizes. While digital payments have increased, altered and forged checks continue to be used to exploit gaps in financial controls, approval processes, and oversight.

Being able to quickly identify altered checks can help organizations uncover fraud early, limit financial losses, and expose broader weaknesses in internal controls. This guide outlines key indicators of altered checks and explains how organizations can strengthen detection and prevention efforts.

Why Altered Checks Are a Red Flag for Altered Check Fraud

Altered checks are rarely isolated incidents. They often indicate:

• Weak approval or review processes
• Inadequate segregation of duties
• Gaps in financial oversight
• Broader fraud schemes involving employees or external actors

Corporate clients are especially at risk for internal fraud schemes involving altered checks, and should implement robust safeguards to protect business accounts from tampering and internal risks.

According to the Association of Certified Fraud Examiners (ACFE), check and payment tampering is the fraud scheme with the highest median loss, at $155,000.

Early detection is critical to limiting both financial and reputational damage.

What Is an Altered Check?

An altered check is a legitimate check that has been modified after issuance to change key details, such as:

• Payee name
• Dollar amount
• Signature
• Memo or purpose

Fraudsters may also target the amount lines, MICR line, and account numbers on a check, as alterations to these areas can be used to commit fraud.

These changes may be subtle or obvious, depending on the method used.

Common Signs of an Altered Check

1. Forged or Manipulated Signatures

One of the most visible indicators of check fraud is a forged signature.

Warning signs include:

• Shaky or uneven lines
• Gaps or breaks in the signature
• Inconsistent pressure or flow
• Pixelated or blurry signatures that may have been copied and printed

Authentic signatures tend to appear fluid and natural, while forged signatures often lack consistency.

Additionally, the use of a signature stamp, if not properly controlled, can also lead to unauthorized or forged endorsements on checks.

2. Altered Payee or Amount Information

Fraudsters commonly alter:

• The payee name
• The numerical dollar amount
• The written dollar amount

Techniques may include erasing, scratching, or chemically removing ink before rewriting information. Red flags include:

• Faded or discolored areas
• Scratches or abrasions on the check surface
• Mismatches between written and numeric amounts

Check washing—a process where chemicals are used to erase original details—can be used to alter the payee or amount information on a check. Any discrepancy should prompt closer review.

3. Paper or Ink Inconsistencies

Checks should be printed on specialized check stock, which is typically thicker and heavier than standard paper.

Watch for:

• Multiple ink colors used for key fields
• Ink that appears newer than surrounding text
• Differences in font or alignment
• Paper that feels unusually thin or smooth

These inconsistencies may indicate post-issuance alterations.

4. Concealed or Embedded Fraudulent Checks

Fraud involving altered checks often relies on speed and distraction.

An employee committing check fraud may:

• Insert an altered check into a stack of legitimate checks
• Rely on an authorized signer to approve documents without detailed review

Organizations that process high volumes of checks are especially vulnerable if controls are weak.

Fraudsters may attempt to cash altered checks quickly before detection, so it is important for organizations to have controls in place to identify and stop such transactions.

Security Features to Check

Modern checks are designed with a range of security features to help prevent check fraud and make altered checks easier to spot. When reviewing a check, pay close attention to elements such as watermarks, microprinting, security threads, and chemical-sensitive paper. These features are intentionally difficult to replicate and are standard practice for financial institutions and credit unions to deter fraud.

Watermarks are often visible when you hold the check up to the light, while microprinting (tiny text that appears as a line to the naked eye) can be found around signature lines or borders. Security threads may be embedded within the check stock, and chemical-sensitive paper will show discoloration if someone attempts to alter the check with solvents or chemicals.

Understanding these security features is essential for anyone handling checks. The Uniform Commercial Code (UCC) also provides a legal framework for negotiable instruments, including checks, and outlines the responsibilities of banks and account holders in cases of fraud. By familiarizing yourself with these features and the protections offered by the Uniform Commercial Code UCC, you can better identify fraudulent or altered checks and protect your organization from financial loss.

Detecting Altered Checks in Bank Statements

Reviewing bank statements regularly is a critical step in detecting altered checks and preventing check fraud. Account holders should carefully examine each transaction for unauthorized payments, discrepancies in the payment amount, or unfamiliar payee names. Even small changes can indicate altered check fraud, so it’s important to scrutinize every detail.

If you notice any suspicious activity or suspect an altered check, report it to your bank as soon as possible. Many banks allow up to one year to dispute unauthorized transactions, but acting quickly increases the likelihood of recovering lost funds. For business accounts and corporate customers, implementing fraud detection methods such as positive pay can provide an extra layer of protection. Positive pay matches checks presented for payment against a list of issued checks, flagging any discrepancies for review.

By making fraud detection a routine part of your financial review process, you can catch altered checks early and reduce the risk of significant losses to your account or organization.

Check Handling and Storage

Proper check handling and storage are essential defenses against check fraud and counterfeit checks. Depository banks and organizations should limit access to check stock, ensuring that only authorized personnel can handle or issue checks. Store all check stock in secure locations, such as locked cabinets or safes, to prevent unauthorized use or theft.

Encourage customers and employees to keep their personal and business checks secure, and provide guidance on signing checks correctly to reduce the risk of forged signatures. Avoid using desktop publishing software to print checks, as this can make it easier for fraudsters to create counterfeit checks that bypass standard security features.

By maintaining strict controls over check stock and educating all parties involved in check handling, depository banks and organizations can significantly reduce the risk of fraud.

How Altered Checks Fit into Larger Fraud Schemes

Altered checks are often part of broader misconduct, such as:

• Expense reimbursement fraud
• Vendor fraud
• Payroll manipulation
• Embezzlement

Fraudsters may use a new account to deposit or cash altered checks, making detection more difficult. Both the check writer and check issuer should be vigilant in reviewing checks for signs of alteration as part of broader fraud prevention efforts.

Identifying one altered check should trigger a wider review of financial records, approval patterns, and related transactions.

The Role of Technology in Fraud Prevention

Technology is a powerful ally in the fight against check fraud. Advanced fraud detection software can quickly identify suspicious checks and flag altered checks before they result in financial loss. Magnetic Ink Character Recognition (MICR) technology is used to verify the authenticity of the check number and routing number, making it harder for fraudsters to pass off counterfeit or digitally altered checks.

Analyzing check images for signs of tampering (e.g., inconsistencies in fonts, alignment, or digital artifacts) can further enhance fraud detection efforts. Financial institutions that invest in these technologies are better equipped to protect themselves and their customers from check fraud, ensuring that fraudulent checks are identified and stopped before they impact accounts.

By leveraging the latest fraud detection tools and regularly updating their systems, banks and organizations can stay ahead of evolving fraud tactics and safeguard their financial assets.

Best Practices for Detecting Altered Checks

Organizations can reduce risk by following tips such as:

• Requiring dual review or approval for checks
• Training employees to recognize fraud indicators
• Segregating duties between check creation, approval, and reconciliation
• Conducting periodic audits of payment activity

Consistency and documentation are key to identifying patterns over time.

Educate customers, clients, vendors, and employees about check fraud risks, best practices for reviewing statements, and proactive measures to help prevent fraud.

Common Mistakes to Avoid

Preventing check fraud requires vigilance and awareness of common pitfalls. One frequent mistake is overlooking inconsistent handwriting or failing to notice forged endorsements—both of which are red flags for altered checks. Whether dealing with business checks or personal checks, always handle them with care and verify the authenticity of cashier’s checks before accepting them.

Staying informed and attentive is the best position to prevent check fraud and ensure the security of your financial operations.

What to Do When You Suspect an Altered Check

If an altered check is suspected:

1. Secure the check and related documentation
2. Preserve evidence without making alterations
3. Review related transactions for similar indicators
4. Escalate the issue to finance, compliance, or investigations teams
5. Document findings and corrective actions

When an altered check is identified, the paying bank and payor bank must follow specific procedures under Regulation CC, including notifying the issuing bank and adhering to the midnight deadline for returning the check. These actions must be completed within the required banking day timeframe. Presentment warranty rules also apply, ensuring that all parties handle the altered check properly and that liability is assigned according to regulatory requirements.

A structured response helps ensure issues are addressed thoroughly and defensibly.

How Case IQ Can Help

Detecting altered checks is only one part of managing fraud risk. Organizations also need a way to document concerns, investigate patterns, and track outcomes consistently.

Case IQ's case management software supports fraud and misconduct investigations by providing a centralized system to capture financial irregularities, document evidence, manage investigations, and analyze trends across cases.

With a structured case management approach, organizations can:

• Identify recurring fraud indicators
• Connect altered checks to broader schemes
• Maintain audit-ready documentation
• Strengthen internal controls over time

This visibility helps teams move from reactive fraud response to proactive prevention.

Frequently Asked Questions (FAQ)

What is an altered check?

An altered check is a legitimate check that has been modified after issuance to change information such as the payee, amount, or signature.

What are the most common signs of an altered check?

Common signs include forged signatures, mismatched dollar amounts, erased or scratched text, multiple ink colors, and paper inconsistencies.

Why are altered checks a serious risk?

Altered checks often indicate broader fraud schemes and weaknesses in financial controls, which can lead to significant financial and reputational harm.

Who should investigate suspected check fraud?

Investigations typically involve finance, compliance, internal audit, legal, and security teams, depending on the severity and scope of the issue.