What Is a Remotely Created Check?
A signature is normally the one thing every check needs, which makes it strange that an entire category of legitimate checks doesn’t require the account holder to sign anything at all.
The short answer
A remotely created check, sometimes called a demand draft, is a check generated by a payee — like a merchant or biller — using the account holder’s routing and account number rather than a signature written by the account holder. It’s typically authorized verbally or electronically during a phone or online transaction, and the check itself usually includes a statement that the account holder authorized it in place of an actual signature.
How it’s typically used
Remotely created checks are most often used when someone provides their bank account details over the phone or through an online form to pay a bill, make a purchase, or send a payment without using a card or wire transfer or ACH. Instead of processing that as a card payment or a standard electronic transfer, the payee generates a check using the account and routing numbers the customer provided, then deposits it like any other check. This lets businesses without card processing, or in situations where a card isn’t accepted, still collect a payment directly from a bank account.
Why it carries higher fraud risk
Because a remotely created check substitutes a printed authorization statement for an actual signature, there’s no signature to compare against the one on file if a dispute comes up later. Anyone who has a person’s routing and account number — obtained legitimately during a transaction or stolen some other way — can potentially generate one of these checks, which is a meaningfully lower bar than forging a convincing signature by hand. This is part of why remotely created checks have historically been associated with telemarketing fraud and predatory practices tied to debt collection, where someone might use account information gathered during a call to create a check the account holder never actually authorized.
What protections exist
- Bank liability rules. Because there’s no signature, the bank that deposits a remotely created check is generally treated as having made a warranty that the check was properly authorized, which creates a path to dispute an unauthorized one.
- A limited dispute window. Consumers who spot an unauthorized remotely created check on their statement generally need to raise the dispute promptly, since the process for reversing it depends on catching it before too much time has passed.
- Business-side screening. Businesses that don’t want remotely created checks accepted against their own account can typically instruct their bank to block them, similar in spirit to how positive pay screens presented checks against an approved list.
How this compares to other check fraud
Unlike check washing, which starts with a legitimately written check that gets physically altered, a remotely created check is generated from scratch using only account data, with no original paper check involved at all. Both ultimately move money out of an account without a proper handwritten authorization, but the mechanics — and the way each gets caught — are different enough that they call for different kinds of vigilance, mainly regularly reviewing account activity for either type of item.
The takeaway
A remotely created check is a legitimate payment tool for legitimate phone and online transactions, but its lack of a signature is exactly what makes it attractive for misuse. Reviewing account statements for unfamiliar remotely created checks, and being cautious about who receives routing and account numbers over the phone, are the most direct ways to keep the convenience from turning into a liability.