Treasury Check Fraud: Ways to Protect Your Credit Union

The recent rise in fraudulent U.S. Treasury checks has become a nationwide concern. Catalyst has observed several instances of this type of fraud, particularly involving alterations to the MICR line, which includes changes to the routing number and payee information.

We want to raise your awareness about this growing issue and the potential losses credit unions may face when depositing fraudulent Treasury checks.

Unlike financial institutions, the U.S. Treasury is not required to meet the 24-hour deadline for expeditious returns. As a result, these fraudulent checks may be returned or processed as adjustments (NOI) months after they have been presented. Additionally, standard check holds will not guarantee the associated funds. It is crucial to keep this information in mind when accepting deposits.

Here are a few ways you can help protect your credit union:

• Take extra care in accepting and verifying the authenticity of all Treasury checks.
• Verify the correct routing transit number (all Treasury checks use routing numbers ending in 518 preceded by zeroes).
• Ensure "U.S. Treasury" watermark visibility on front & back.
• Examine the "pay to" line, confirming the correct font and placement.
• Pay attention to member behavior. If a member doesn't regularly deposit Treasury checks or high-dollar checks, exercise caution when authenticating or consider refusing the deposit.
• Find additional Treasury check validation training for you and your teller staff.

For more information, please visit the Fraud Prevention webpage on the Catalyst website.

About Catalyst

With innovative payments, asset management, and liquidity solutions, Catalyst is unlocking new possibilities for credit unions across the nation and the members they serve. We are passionate about transforming goals into achievements and helping credit unions grow.