Will COVID And Fraud Finally Kill The Paper Check?

PYMNTS has been writing for years about the ongoing push to #killthecheck, but paper checks live on because of their ubiquity of acceptance and simplicity to issue despite the fact that most people on the receiving end really hate getting them.

However, the price of that simplicity is embracing the many foibles of paper checks — in some cases, with hilarious results.

Consider the roughly 200 Rhode Islanders who recently received tax refund checks signed by Mickey Mouse and Walt Disney. Their signatures took the place of Rhode Island General Treasurer Seth Magaziner and State Controller Peter Keenan’s John Hancocks, which should have been on the checks.

Jade Borgeson, chief of staff for the Rhode Island Revenue Department, told the media that the error was the result of a technical glitch that had the check signatures printed from test files. The majority of the misprinted checks were sent to businesses receiving corporate tax refunds.

The revenue department told local media that it’s reaching out to impacted taxpayers to apologize for any inconvenience the error caused and will send out new checks without Mickey or Walt’s signatures within a week.

And in a lightly less amusing checks-gone-bad story, a Florida man is accused printing a phony check on his computer to pay for a Porsche that he was allowed to drive away with.

Casey William Kelley was arrested last week on charges of grand theft of a motor vehicle and “uttering” a false banknote, according to The Palm Beach Post.

The paper said the man allegedly purchased a 911 Turbo from a dealership using a fraudulent check written for $139,203.05 last week. A day later, Kelley allegedly attempted to purchase three Rolex watches with a similar do-it-yourself check made out for $61,521.

But the paper said that unlike the auto dealer, the jeweler kept the merchandise until it could confirm the check would clear. When it determined the check to be a fake, the police were called. Meanwhile, the car dealership had also contacted authorities over the allegedly purloined Porsche.

When arrested, Kelley reportedly told investigators he printed out the cashier’s checks from his home computer and did not get them from his bank. He was booked and transported to a local jail without incident, the Post said.

While the two cases stand out for their absurdity, they highlight the potential difficulties of using paper checks — something the pandemic has only made more clear.

Case in point are the roughly $1.4 billion in stimulus checks the U.S. government accidentally sent to dead people. The IRS has reportedly gotten much of the money back, putting out instructions for those who received checks for dead family members on how to return it.

But GIACT Co-Founder and CEO Melissa Townsley-Solis recently told PYMNTS the odds of actually pulling back all of the funds are pretty slim. She said opportunistic recipients had most likely already cashed the checks and spent the money.

“I truly wish them good luck with trying to hunt down those funds, but I don’t think they are going to be very successful,” Townley-Solis said.

Drew Edwards, Ingo Money‘s CEO, told PYMNTS in a separate interview that issuing checks to the wrong people was a real risk at a time Uncle Sam was paying out billions or even trillions of dollars in stimulus via paper checks.

“Mobile deposit fraud was a $2 billion-a-year problem for banks before we were in a crisis where everybody’s desperate and people are fighting over bottles of water and toilet paper …,” Edwards said. “What do you think happens to people when they get desperate? When they haven’t been paid in a few weeks? They steal checks. So, the fraud goes up, not down.”

And it turns out that sending checks to dead people isn’t the government’s only worry; the whole process is a creating a health risk at the IRS.

Roughly 10 percent of U.S. tax filers are still mailing in a paper returns and paying their taxes by check, and IRS employees who’ve been working remotely can’t process them from home. So, the agency has had to call workers back in just to take on the paper.

Not surprisingly, the affected IRS employees are none too pleased. One employee told the media that while she understood the importance of her role, “No one wants to die to make sure somebody’s tax return is accurate.”

So, perhaps the pandemic and other recent problems will finally send the paper check on its way out, as opposed to all of the other times in the past decade when we’ve been promised its imminent demise. After all, checks are now becoming not just an annoyance, but a potentially unsafe payment method that can also enable fraud.