As an economic-crimes detective, I've had many of my discussions with friends turn to the risks associated with modern payment methods. It's not unusual for someone to proudly proclaim, "That's why I only use checks and cash!" But they're shocked when I tell them there are probably more dangers associated with using checks, especially when they're written to a business or unfamiliar person, than with most digital wallets or other payment apps. 

Image source: Getty Images.

All the information fit to steal

A check is a treasure trove of information for fraudsters. Think about all the personal data you want to hide from thieves and then think about what's printed on the front of your personal checks: names, addresses, the banking institution, the bank's routing number, and the check holder's account number. Even worse, when writing a check at a retail location, you may be required to write your driver license number on the front of the check; in a few states it's the check writer's Social Security number.

With access to this data, thieves can pay for items online with just the account and routing numbers. Many prepaid cards can also have money transferred to them from a bank account by using the same information. That's to say nothing of the risks of identity theft or an account takeover once this information is compromised.

When you write a check to a business at the point of sale, it's generally handled by several employees before being deposited. It's virtually impossible to know how many people will see any particular check before it's finally deposited.

Each person who sees the check is a potential weak link in its chain of custody. Remember: All one has to do is take out a smartphone and snap a quick picture of the check to have access to all the information it carries. It could be done in less than five seconds, and no one would ever know.

At this point, some readers might be thinking they're safe because they don't write checks at merchant locations; they only use checks to pay bills. But placing a check in the mailbox and flipping the little red flag up is just as dangerous. A thief can roll by and steal an envelope from an unsecured mailbox in no time.

Finally, the worst thing about using checks is the same problem one runs into when using debit cards: If there's a dispute when fraudulent transactions are performed, it's your money that's missing, not the bank's. You'll find yourself in the very stressful position of fighting to get back all the money that was originally in your account. In the meantime, previously written checks might bounce, and scheduled withdrawals could accrue overdraft fees.

In other words, the legal protections that are in place for credit card use are missing when it comes to checking account fraud. Checking account holders have only two business days after receiving their statement to report fraudulent transactions, or they could be liable for up to $500. If a victim fails to do so more than 60 days after receiving a statement, then they might be personally liable for all the money missing from their account. This could mean serious trouble for most Americans. In an online consumer poll conducted by Statistic Brain in December 2015, 79% of respondents claimed they rarely or never balanced their checkbooks.

What you can do

If you must use checks, however, here are a few pointers to help you avoid getting defrauded:

  1. Limit your check writing as much as possible. If at all possible, don't write checks at retail locations where several people might have access to each check. Auto-pay your bills online so that the money is directly withdrawn from your checking account each month. Limiting the number of checks written each month is of paramount importance.

  2. Only write checks to people you personally trust. A cleaning lady who's been helping out for several years can probably be trusted. A $25 birthday check to a beloved niece or nephew is fine. But if you're paying a tree trimmer in an unmarked truck whom you've never seen before? Try to find another way to pay. Make a quick run to the ATM or see if the person can accept credit card payments or money transfers via a platform such as PayPal.

  3. When paying bills with checks via mail, don't leave the check in an unprotected mailbox in front of the house. Drop it off in a USPS mailbox or at the post office.

  4. Never carry around a checkbook in a purse or handbag. The risk of losing it or having it stolen is just too great.

  5. When writing a check, try to use a pen that can't be erased with common elements such as nail polish remover. For example, the ink in Uni-Ball's 207 gel pen contains color particles that get trapped in the paper, making it extremely hard to erase.

  6. No matter what, account holders should reconcile their statements with their checkbooks every single month. Immediately report any suspicious activity or unfamiliar withdrawals to your bank. 

Following these guidelines will greatly reduce the risk that your account is compromised through written checks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.