In early January 2024, Steve’s wife wrote a check, from their personal Wells Fargo bank account, and addressed it to the IRS for $310,000. This check was Steve’s estimated payment for his first-quarter federal taxes that year. She took the check to a secure mailbox inside a Seattle area post office and the check cleared on Jan. 31, according to a Wells Fargo bank statement.

It wasn’t until the following November, when his accountant contacted him, that Steve realized the IRS never got the check. Then, on Dec. 18, the IRS asked Steve to provide a front and back copy of the $310,000 check. After his wife retrieved a copy from a local Wells Fargo branch, Steve discovered that someone had stolen the $310,000 check, chemically washed it, and replaced “IRS” on the payee line with a random name “Ezavier Josiah Staples.”

Staples—or whoever pulled off the scam—had signed the back of the check and deposited it into a JPMorgan Chase checking account.

When asked why he didn’t realize any sooner that someone had stolen the check, Steve said he makes “more than a hundred” payments each quarter because he operates multiple businesses across different states, which is why he didn’t notice that the IRS hadn’t received the check. He could go through each payment but that “would be exhausting,” Steve said.

A very prevalent fraud

Check fraud is big business. In 2023, nearly 80%, or $21.1 billion, of global check fraud occurred in the Americas, according to the Nasdaq’s Global Financial Crime Report. Fraud prevention was one reason that prompted President Donald Trump to sign an executive order in March directing the federal government to stop using paper checks and switch to secure electronic payments as of Sept. 30.

Christopher Caffarone, a partner at law firm Pillsbury Winthrop Shaw Pittman’s corporate investigations and white collar defense practice, said schemes like check washing are very prevalent. “Members of the public should be vigilant about reviewing financial accounts. If they see anything suspicious, they should report it to the financial institution and to the police,” Caffarone said.

This is exactly what Steve did. On Dec. 18, the day he learned of the check fraud, Steve filed a claim with Wells Fargo. One week later, Steve received a form letter from the bank denying the claim, because too much time had elapsed. Then he reported the fraud to the Seattle police, who told Steve that he had a year to report the fraud, which started the moment he realized a crime had been committed. “I’m just shocked that [banks] don’t have insurance for this kind of thing, or with all the fraud stuff they’re doing, that they don’t care about protecting the consumer,” he said.

U.S. Banks are governed by the Uniform Commercial Code. Under the UCC, victims of check fraud have one year to file a claim, but banks can shorten this time to much less. Banks like Wells Fargo typically give consumers 30 to 60 days to notify them of check fraud, which will start the process of recovering funds. 

Steve also reported the case to the Office of Comptroller of the Currency, which regulates and supervises national banks; the Consumer Financial Protection Bureau, a government agency dedicated to protecting the consumer in the financial marketplace; and with the Internet Crime Complaint Center, a division of the FBI. He hasn’t heard anything from the OCC or the IC3. The CFPB told Steve there was nothing they could do because Wells did nothing wrong.  

The entrepreneur isn’t backing down. “It’s just a principle of the thing for me. I just can’t believe that in this day and age, someone could steal $310,000 and both Chase and Wells Fargo just say, ‘Tough luck.’ They have no checks and balances, or nothing in place to protect us,” Steve said.

He has started legal action against Wells Fargo, but there is still no resolution. The bank, in a Feb. 11 letter, said it had sent a request to Chase to retrieve the $310,000. A Chase spokesman told Fortune that the bank did receive a claim from Wells Fargo and are looking into the matter.

Steve said the case may go to arbitration, where he might lose and then he could be responsible for much more, including Wells Fargo attorney fees.

How to avoid

Wells Fargo and Chase each provided tips to help deter check fraud. Both banks encourage consumers to use check alternatives, including online or digital payments, when possible. Chase advises its customers to use permanent ink and, when writing the payee’s name, to fill up the whole line. Wells Fargo recommends that consumers set up account alerts, and promptly review their statements, including the front and back images of cashed checks. “We never want to see anyone fall victim to fraud or scams,” a Wells Fargo spokeswoman said.

Steve is not to blame for what happened, said Pillsbury’s Caffarone. “Blame falls squarely on the individual who stole the check and used it for their own personal gain,” Caffarone said.

For now, Steve is out an additional $310,000, which he paid to the IRS—along with interest and a penalty. But he and his wife have learned an important lesson.  “Don’t use checks for anything, unless you’re just paying your babysitter or your dog walker or someone you really know and you’re handing it to them. And don’t put checks in the mail,” Steve said.