Be Aware of Tax Refund Check Fraud

According to the IRS, 20% of tax refunds are still issued by check. During tax season, you and your bank are likely to see these checks, so now is the time to remind your staff to be alert for fraudulent tax refund checks that have been altered, counterfeited or stolen. Remember, even government-issued checks are not always “as good as cash.”

Your tellers should apply the same controls on tax refund checks as any other commercial check:

  • Never cash checks for noncustomers, not even those issued by the government. A government-issued tax refund check may well have been stolen from a mailbox or by insiders within a postal operation.
  • Despite the legitimate look and feel of many counterfeit items, your staff should check for alterations or other signs the item may be fraudulent.
  • Never allow a check made payable to a commercial entity to be deposited into a personal account.
  • Remember that refund checks issued by tax preparers are not government-issued checks.
  • Apply a more stringent review to checks coming through check-cashing operations such as check-cashing stores.

While it is impossible to prevent all fraud, your front-line staff is in the best position to help mitigate exposure from counterfeit tax refund and other checks that continue to be a source of loss for banks.  

1. Source:; Webpage update effective February 18, 2020 

This information provides guidance and is not intended as a legal interpretation of any federal, state or local laws, rules or regulations. ABA Insurance Services Inc. (“ABAIS”) does not warrant that all potential hazards or conditions have been evaluated or can be controlled. The liability of ABAIS and its affiliates is limited to the terms, limits and conditions of the insurance policies issued by ABAIS. 022020.SA2 © ABA Insurance Services Inc., dba Cabins Insurance Services in CA, ABA Insurance Services of Kentucky Inc. in KY, and ABA Insurance Agency Inc. in MI, 3401 Tuttle Rd., Suite 300, Shaker Heights, OH 44122. CA license #0G63200