1857 Called. It Wants Its Fraud Back.
Wrestling Payments Podcast: Season 4 - Episode 11
Episode Summary
In this special solo episode of Wrestling Payments, host Joe Casali takes listeners on an unexpected journey from the fraud-filled banking system of the 1850s to today's growing check fraud crisis. Using the proposed Stop Payments Fraud Act of 2026 (H.R. 9331) as a starting point, Joe argues that while the legislation is a meaningful step forward, it may only address the symptoms of a much larger structural problem.
Drawing on historical research, Joe compares the modern check ecosystem to America's Free Banking Era, when thousands of financial institutions issued their own currencies and counterfeit notes flooded the economy. He highlights striking parallels between nineteenth-century bank note fraud and today's check fraud environment, where thousands of institutions issue checks with varying security features while organized fraud rings exploit weaknesses in the system.
Throughout the episode, Joe explores why the United States continues to add new payment systems without retiring older ones, why check fraud remains stubbornly persistent despite decades of innovation, and how lessons from the National Currency Act of the 1860s may offer a roadmap for reducing fraud today. He discusses the role of regulation, fraud prevention technologies, information sharing, education, and modernization efforts in creating a more secure payments ecosystem.
The episode ultimately asks a provocative question: if America once replaced a fragmented and fraud-prone payment system with a safer national standard, could a similar transformation happen again?
The core message throughout the episode is simple: fraud is not just a criminal problem. It is often a systems problem. And systems can be redesigned.
For payments professionals, financial institutions, risk managers, treasury teams, and business leaders struggling with the rise of check fraud, this episode provides historical perspective and a call to think bigger than incremental fixes.
Host-at-a-Glance
💡 Name: Joe Casali
💡 What he does: Host of Wrestling Payments and Executive Vice President at NEACH
💡 Episode Format: Solo commentary and industry analysis
💡 Focus: Check fraud, payment system modernization, fraud prevention, payments history, and public policy
💡 Key Topic: Why today's check fraud crisis looks surprisingly similar to the banking fraud challenges of the 1850s
Key Insights
Check Fraud Is a Modern Version of an Old Problem
Joe argues that today's check fraud challenges closely resemble the fraud crisis that emerged during America's Free Banking Era. Just as thousands of banks once issued unique currencies with inconsistent security features, today's financial institutions issue millions of different check formats that remain vulnerable to alteration, theft, and counterfeiting.
The Stop Payments Fraud Act Is Helpful but Not Transformational
The proposed legislation would provide financial institutions and law enforcement with stronger tools to investigate and prosecute check fraud. However, Joe contends that the bill addresses consequences rather than root causes and will not eliminate the structural vulnerabilities that make check fraud possible.
America Has Eliminated Payment Systems Before
A common belief in payments is that the United States never retires payment systems. Joe challenges that assumption by examining how state-issued currencies were effectively phased out after the National Currency Act, creating a more standardized and secure monetary system.
Fraud Prevention Requires More Than Regulation
Joe outlines a broader approach that includes modernized check standards, stronger security features, better industry-wide information sharing, expanded fraud detection capabilities, and ongoing education for businesses and consumers.
Education May Be One of the Most Undervalued Fraud Controls
Many organizations remain unaware of available fraud prevention tools such as Positive Pay and other account monitoring services. Joe argues that better education could substantially reduce fraud without waiting for new technologies or regulations.
Episode Highlights
Why H.R. 9331 Matters
00:01:00 - 00:03:45
Joe introduces the Stop Payments Fraud Act of 2026 and explains how it seeks to strengthen law enforcement tools and provide financial institutions with additional time to investigate suspicious checks before releasing funds.
"It's gonna give the investigators certainly more time to look at the problem."
The Payment System We Never Retire
00:04:00 - 00:05:30
The conversation examines a common observation in the payments industry: America continuously adds new payment rails but rarely eliminates old ones. Joe uses this idea to frame his broader argument about checks.
"The U.S. adds new payment systems, but they never delete one."
The 1857 Fraud Problem
00:06:00 - 00:10:00
Joe recounts how more than 2,500 financial institutions once issued approximately 30,000 different forms of currency and explains how widespread counterfeiting became a national problem.
"By 1865, about 50 percent of them were counterfeit."
Why Check Fraud Looks Familiar
00:10:00 - 00:15:30
Comparing nineteenth-century bank notes to modern checks, Joe highlights similarities in security challenges, verification requirements, and fraud detection efforts.
"It's the same model. Different century."
The State of Check Fraud Today
00:15:30 - 00:18:45
Joe reviews current check fraud trends, discusses rising Suspicious Activity Reports, and examines why checks continue to represent a significant share of payment activity despite decades of digital innovation.
"Sixty-three percent of American organizations reported check fraud."
What the Stop Payments Fraud Act Does and Doesn't Do
00:20:00 - 00:23:00
Joe breaks down the legislation's key features and explains why he believes it should be passed while also recognizing its limitations.
"It's a sip of water in the desert."
Lessons from the National Currency Act
00:23:00 - 00:26:15
Looking back at the reforms that helped phase out state bank notes, Joe discusses how standardization, regulation, and economic incentives transformed the payments landscape.
"They eliminated a payment system."
Five Levers for a Stronger Fraud Strategy
00:26:15 - 00:30:45
Joe outlines a broader framework for reducing fraud, including modernized check standards, information sharing, automation, advanced fraud detection, and expanded education.
"Facilitate secure information sharing across financial institutions, law enforcement and private sector to identify and stop fraud rings."
Positive Pay: An Existing Solution More Organizations Should Use
00:30:00 - 00:30:40
Joe points to Positive Pay as an example of a proven fraud prevention tool that remains underutilized across the industry.
"How many people are on Positive Pay? Not enough. Clearly not enough."
Transforming Check Fraud from a Structural Risk to a Manageable Risk
00:34:45 - 00:36:15
In closing, Joe argues that the goal should not be the complete elimination of fraud but reducing systemic vulnerabilities and allowing technology to handle routine fraud detection.
"Let the systems try to solve the easier problem."
A Call for Bigger Thinking
00:39:30 - 00:40:45
Joe concludes by encouraging listeners to support broader industry discussions around payment modernization, arguing that incremental improvements alone will not solve the long-term challenge.
"H.R. 9331 is good. It should be passed. It's not gonna solve the problem."
To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, YouTube, Spotify, or wherever you get your podcasts.