Senators Urge ABA to Address "Check Washing" Scams

Senate Banking Committee Chair Sherrod Brown (D-OH) and Committee members Senators Cortez Masto (D-NV) and Elizabeth Warren (D-MA) asked the American Bankers Association to design a plan to address an increase in "check washing" scams.

In a letter to the ABA, the Senators stated that in 2022 there was an 84 percent increase in check washing scams that cost Americans $815 million. The Senators attributed the rise in check washing to (i) banks’ failure to properly identify fraudulent checks, which creates delays in reimbursing victims, and (ii) larger banks’ tendency to shift liability to other banks that deposit the washed checks, which delays establishing liability and providing reimbursements.

The Senators asserted that it is the responsibility of banks to address check washing scams and asked the ABA to submit a briefing on how it plans to work with member banks to address such issues by March 17, 2023.