Checks have long been a risky and anachronistic way of paying for things, and that's only become more true with the explosion of online payment fraud in recent years.
Financial writer Felix Salmon of Fusion has a great piece on just how dangerous handing out little pieces of paper with most of the key credentials for your bank account written on them can be. He decided to try a little experiment: he posted his checking account number on Fusion's Slack online chat service to see what would happen:
A few weeks ago, in a fit of severely misplaced confidence in the security of the American banking system, I dropped my bank account number and routing number into the Fusion Slack. That's not exactly top-secret information -- it's on every check I've ever written, not to mention countless invoices and other forms. How dangerous could it be? And then my colleague Kashmir decided to see for herself. She logged on to her American Express account, clicked on "pay my bill." and told Amex to just withdraw the funds from my account.
Which they did.
At no point did Amex or anybody else ask or seek my permission for Kash to raid my account to pay her credit card bill; instead, the money just disappeared one day. All that was left behind was an unhelpful note saying "Amex Epayment."
Salmon went to the National Automated Clearing House Association, which handles electronic transfers that use your checking account number, and the best solution they offer is "stop writing paper checks."
A little background: Salmon's story was inspired by a piece by Vice's Sarah Jeong about the headaches that resulted from thieves getting ahold of her account number.
In the piece, Jeong expresses disbelief that, in an age when online security is such a huge issue, and even a free email account can have "two-factor" authentication -- meaning you have to pass two tests to enter, such as providing a password and a code received via text message -- bank accounts have one unchangeable number that basically rules your account forever, and that we do very little to protect it.
Not a new issue, but stakes are rising
The truth is, checks have always provided a wealth of information for would-be criminals, it's just that a rapidly changing world has made that much more dangerous -- and tough to resolve.
Not only can criminals empty your checking account much more quickly these days (often aided by massive data breaches at institutions that handle payment information), but the rise of automated payments has made the hassle of closing a compromised account and opening a new one much, much more harrowing.
Before automated payments, getting a new account was as simple as making a trip to a branch, filling out some paperwork and ordering new checks.
Now, it involves going to every single business you've given your payment information to and updating it before you either miss a payment (possibly resulting in a late fee or an interruption of service), or have a debit hit an account that you no longer have any money in and getting an overdraft charge. And setting up bill pay on your new account. And updating the apps on your phone that draw money from your checking account in order to work. In short, it's a real pain.
Banks could probably make the process of switching accounts easier, but they benefit too much from making it hard -- chaining you to one account number means you won't switch banks every time a better offer comes along.
The upshot is there's a very good chance that if someone gets ahold of your account number and decides to empty your account, not only will you lose access to your balance until the matter is resolved, you'll also be stuck with the chore of cutting and then replacing all the connections to your checking account that are just a part of everyday life now.
That makes disclosing your checking account number (as well as your name, address and phone number) on a check is, as my colleague Mike Cetera put it, akin to printing your Social Security number on your driver's license. So the wisest course of action may be to write as few checks as possible, try to avoid entering in your checking account number online and, of course, don't lose your checkbook.
What do you think? Do you write checks? Have you ever had any problems with fraud resulting from a stolen account number?
Follow me on Twitter: @claesbell.