WASHINGTON — Senate Democratic lawmakers wrote to the American Bankers Association criticizing the process of "check washing," a kind of check fraud that the lawmakers said has "become an elaborate and organized method of successfully scamming consumers and banks."
Check washing involves changing the payee name on a check, and often the dollar amount, according to the United States Postal Inspection Service.
The lawmakers, including Senate Banking Committee Chairman Sherrod Brown, D-Ohio, and Sens. Elizabeth Warren, D-Mass., and Catherine Cortez Masto, D-Nev., asked the bank group to come up with a plan to address the issue with its members by March 17.
"Check washing has become an elaborate and organized method of successfully scamming consumers and banks. In 2022, banks saw an 84% increase in check fraud, costing consumers an estimated $815 million," the senators said
Small banks have complained for months about the rise of check washing and check fraud, saying that large banks have been slow in repaying the smaller banks that get defrauded. Last month, the Community Bankers Association of Illinois
In a statement, ABA spokesperson Sarah Grano said that the group shares the senators' concern about check washing, and that they look forward to detailing what ABA and its members are doing to protect consumers.
"We hope the senators will join our efforts to educate the public on how to avoid check fraud and also encourage the U.S. Postal Service, law enforcement and other stakeholders to work more closely with the industry to prevent these crimes from happening in the first place," Grano said in a statement.
Previously, the trade group said more broadly that it has created an ad hoc committee on check fraud so members could share common practices to clear the current backlog.
"It is a problem across the industry," said Paul Benda, the ABA's senior vice president of operational risk and cybersecurity,
