Banks across Santa Barbara have experienced a rise in bad checks during the past month, reportedly caused by intercepted mail.

According to James Jefferson, the chief risk officer for Montecito Bank & Trust, the wave of bad checks began in July. Before the recent wave, Jefferson said he saw one to five bad checks a month.

“When you see an uptick like we’re seeing now, it’s more like 10 to 20 in a month,” he said.

The checks have been for varying amounts, but usually less than a few hundred dollars.

Although not all of the attempts were successful, Jefferson estimated the total of the bad checks to be between $250,000 and $300,000. Some checks were caught by bank staff so that customers did not lose money, he added.

He said Montecito Bank & Trust is seeing two types of check fraud. One is the classic counterfeit, when someone obtains a copy of a customer’s check and makes duplicates.

“If they get that check, they’ve got the account numbers, routing number, check sequence number and all that stuff,” Jefferson said. “So, one thing we’re seeing is just straight counterfeit checks where it’s the correct account number and all that good stuff, but different dollar amount, different payee than what the original check was written for.”

The other type of scam seen in the past month involves altered checks.

In that case, checks are intercepted and the payee on the check is changed. The person then goes to a different bank to cash it.

An issue with that scam, Jefferson said, is that the person who wrote the check doesn’t always know that it was stolen and changed, especially if the amount of the check wasn’t changed. Jefferson said people may not be aware the check was intercepted unless they look at the image of the check that was deposited.

American Riviera Bank also reported signs of bad checks recently.

Laurel Sykes, the bank’s executive vice president and chief risk officer, confirmed that the bank has seen checks that have been modified to new payees.

Just like Montecito Bank & Trust has reported, checks are being intercepted and the payee on the slip is being changed.

“Clients are having a difficult time detecting it because it’s the same dollar amount as the check they wrote and the same serial number,” Sykes told Noozhawk. “All the criminal is doing is counterfeiting that exact check and changing the payee. So, when it clears their account they are just not aware.”

According to Sykes, check fraud had slowed down in the past five years. The bank used to receive a report of a bad check once a month, but Sykes estimated that they’re now seeing one almost every day.

The main theory for the bad checks is that they are being intercepted from the mail. As the issue has grown, banks have communicated to warn one another and to learn more about the trend.

Sykes said her office has heard complaints about post offices but also blue mailboxes in the Santa Barbara area. The bank put out a warning to its customers last month to not use the blue bins because of the risk of theft.

The bank also put out a blog post urging its clients to avoid paying by check when possible and consider other payment methods. She also recommended that businesses enroll in a service called Positive Pay.

Jefferson said reports from clients suggest that the issues could be connected to the San Roque post office on State Street or the post office on Patterson Avenue in Goleta.

Lucas Watanabe with the U.S. Postal Inspection Service confirmed that the agency is investigating the issue in Santa Barbara and working alongside local authorities.

However, he said he could not comment on an ongoing investigation.

He said the following guidelines can help residents prevent mail theft:

• Remove mail from your mailbox every day. Do not let incoming or outgoing mail sit in your mailbox.

• Don’t leave your mail unattended for extended periods of time. Have your post office hold your mail while you’re away. That can be done online at usps.com. 

• If you change your address, immediately notify your post office and any financial institutions you do business with via mail.

• If you have outgoing mail, hand it to your letter carrier, mail it at the post office or place it in a blue collection box before the last pickup time listed on the box. 

• Customers are urged to report stolen mail as soon as possible by submitting an online complaint to the Postal Inspection Service at uspis.gov/report or by calling 877.876.2455. Additionally, individuals are encouraged to report allegations of Postal Service employee misconduct, including attempts to corrupt a Postal Service employee, to the USPS OIG at 888.877.7644 or uspsoig.gov.