diff --git a/compiler/src/dotty/tools/dotc/transform/CheckUnused.scala b/compiler/src/dotty/tools/dotc/transform/CheckUnused.scala
index ef27e9c44daf..59878757c39b 100644
--- a/compiler/src/dotty/tools/dotc/transform/CheckUnused.scala
+++ b/compiler/src/dotty/tools/dotc/transform/CheckUnused.scala
@@ -204,12 +204,15 @@ class CheckUnused extends MiniPhase:
         case t:tpd.ValDef =>
           prepareForValDef(t)
           traverseChildren(tree)(using newCtx)
+          transformValDef(t)
         case t:tpd.DefDef =>
           prepareForDefDef(t)
           traverseChildren(tree)(using newCtx)
+          transformDefDef(t)
         case t:tpd.TypeDef =>
           prepareForTypeDef(t)
           traverseChildren(tree)(using newCtx)
+          transformTypeDef(t)
         case t: tpd.Bind =>
           prepareForBind(t)
           traverseChildren(tree)(using newCtx)
@@ -332,7 +335,7 @@ object CheckUnused:
      * The optional name will be used to target the right import
      * as the same element can be imported with different renaming
      */
-    def registerUsed(sym: Symbol, name: Option[Name])(using Context): Unit =
+    def registerUsed(sym: Symbol, name: Option[Name])(using Context): Unit =      
       if !isConstructorOfSynth(sym) && !doNotRegister(sym) then
         if sym.isConstructor && sym.exists then
           registerUsed(sym.owner, None) // constructor are "implicitly" imported with the class
@@ -368,7 +371,7 @@ object CheckUnused:
             implicitParamInScope += memDef
           else
             explicitParamInScope += memDef
-        else if currScopeType.top == ScopeType.Local then
+        else if currScopeType.top == ScopeType.Local then 
           localDefInScope += memDef
         else if memDef.shouldReportPrivateDef then
           privateDefInScope += memDef
diff --git a/tests/neg-custom-args/fatal-warnings/i15503i.scala b/tests/neg-custom-args/fatal-warnings/i15503i.scala
index c4d95c7904fa..33e04f34daa8 100644
--- a/tests/neg-custom-args/fatal-warnings/i15503i.scala
+++ b/tests/neg-custom-args/fatal-warnings/i15503i.scala
@@ -75,6 +75,16 @@ package foo.test.companionprivate:
     private def b = c // OK
     def c = List(1,2,3) // OK
 
+package foo.test.i16678:
+  def foo(func: Int => String, value: Int): String = func(value) // OK
+
+  def run = 
+    println(foo(number => number.toString, value = 5)) // OK
+    println(foo(number => "<number>", value = 5)) // error
+    println(foo(func = number => "<number>", value = 5)) // error
+    println(foo(func = number => number.toString, value = 5)) // OK
+    println(foo(func = _.toString, value = 5)) // OK
+    
 package foo.test.possibleclasses:
   case class AllCaseClass(
     k: Int, // OK
@@ -120,4 +130,4 @@ package foo.test.from.i16675:
   case class PositiveNumber private (i: Int) // OK
   object PositiveNumber:
     def make(i: Int): Option[PositiveNumber] = //OK 
-      Option.when(i >= 0)(PositiveNumber(i)) // OK
\ No newline at end of file
+      Option.when(i >= 0)(PositiveNumber(i)) // OK