How Mitek helps banks protect against U.S. Treasury check fraud

March 4, 2025 by Kerry Cantley - VP, Digital Banking Strategy at Mitek

Receiving a check from the U.S. Treasury is sure to bring a smile to any American’s face; seeing the Statue of Liberty tower over the bluish-yellow paper sky means that more money will soon be in their pocket. Or maybe a fraudster’s pocket, since Treasury checks are criminals’ number one target for counterfeiting. Luckily, Mitek Check Fraud Defender is detecting more fake and altered Treasury checks in real-time, at the moment of deposit.

Let’s dive in to see why fraudulent Treasury checks are more challenging to spot than their bank check brethren, and how Check Fraud Defender features purpose-built for Treasury checks offer superior, “Day Zero” protection.

 

Treasury check fraud 101

Federal Reserve checks in 2024First and foremost, fraudsters love to steal, alter or create fake Treasury checks because they are considered guaranteed funds drawn against the U.S. government; banks and credit unions must make the deposited funds available the next business day. Treasury checks can also be exchanged for currency at retail U.S. Post Offices and check cashing stores, which may not have sophisticated check fraud detection technology deployed at the point of sale.

Because so many Treasury checks are issued, it’s easier for fraudsters’ handiwork to avoid scrutiny. In 2024 the Federal Reserve processed 36 million government checks valued at $1.75 trillion, most of which are issued by the U.S. Treasury. While these checks may be more difficult to wash because they feature bleeding ink, they are easy to reasonably reproduce on a good high-resolution printer. A missing physical watermark or ultraviolet overprinting on a fake Treasury check might not be noticed in a busy branch or by deposit image capture software.

Sophisticated printers allow fraudsters to mimic many of the unique features found on the newest versions of Treasury checks, such as the corner QR code and basket weave pattern that surrounds the signature on some types, microprinting, mail barcode, and more. These counterfeit checks slip more easily into the legitimate banking system.

Fraudsters have also upped their game with tried-and-true alteration methods, such as changing a payee name but keeping the address. These fakes are getting so good that they pass all typical fraud detection processes. Stolen Treasury checks are often simply deposited via ATM and mobile, and processed with no fraud validation. The check appears to be legitimate and passes through the system; no one knows it’s fraudulent until the intended receiver calls the government issuer, looking for their check. Unfortunately the processing bank may have to take the loss.

 

Mitek’s Day Zero solution to stop Treasury check fraud

Mitek has built enhanced artificial intelligence (AI) analytics into Check Fraud Defender to detect anomalies in Treasury checks. Check Fraud Defender extracts multiple types of information and, through our US Treasury Fraud Detection Toolkit, analyzes all the image and data attributes to detect fraud. For example, the toolkit verifies attributes such as date of issuance and routing number, as well as programmatically comparing the item to what the check should look like. For example, Treasury checks are valid for only one year and use a different routing number format than the U.S. banking system. In this way, Check Fraud Defender provides pinpoint insight into which elements are incorrect, indicating fraud.

Mitek works closely with financial institutions, industry groups, and regulators, sharing information to stay one step ahead of fraudsters. Importantly, Mitek’s cloud-based Treasury check fraud solution can operate in real-time, offering Day Zero protection. Thanks to real-time connectivity, Check Fraud Defender applies sophisticated AI algorithms at the point of capture to analyze the item against Mitek’s mix of proprietary, consortium and government data. Fake checks that fraudsters are attempting to deposit through their phone, at an ATM or at a teller’s window can be identified immediately and stopped in the moment, hours before post.

Real-time, Day Zero detection is a key Mitek differentiator. Other providers’ solutions are typically deployed on premises and use only proprietary data to analyze Treasury checks for fraud after deposit, on day one or two of the clearing process. But by that time, fraudsters have had ample opportunity to withdraw the funds, leaving the bank with an unmitigated loss.

 


 

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