murphy chk 031324SPRINGFIELD – Victims of paper check fraud are one step closer to relief thanks to a measure from State Senator Laura Murphy.

“Instances of paper check fraud have been on the rise in the last few years, and the regulations in place don’t always protect consumers,” said Murphy (D-Des Plaines). “Victims can wait months for relief and still never see it. Hardworking Illinoisans deserve better.”

Paper check fraud often involves what is known as “check washing,” a process of stealing an existing check and altering it to reflect a larger value and a different payee. Under Murphy’s measure, financial institutions would be required to investigate paper check fraud within 10 business days after receiving notice from a customer. If it is determined that fraud occurred, the institution would need to refund the customer’s account with the amount of the fraud within one business day.

If the financial institution isn’t able to complete the investigation within 10 days, it would need to credit the customer’s account in the amount of the alleged fraud within one business day. The institution could then take up to 45 days to determine whether fraud occurred.

According to the Financial Crimes Enforcement Network, check fraud has increased significantly since 2020. In 2021, there were 350,000 suspicious activity reports made to FinCEN, a 23% increase from 2020. That number grew to 680,000 reported instances in 2022.

“Victims of paper check fraud can have their entire lives put on hold — they can even lose their homes or businesses through no fault of their own,” Murphy said. “We need to establish a way for victims to get their hard-earned money back and go on with their lives.”

Senate Bill 2029 passed the Senate Financial Institutions Committee on Tuesday. It now goes to the full Senate for further deliberation.