There are many misconceptions about cashing checks. One is that once the money is on your account that it’s safe to use the funds. However, that’s not always the case.
Under federal law, banks must make funds from check deposits available quickly. And if you have a good relationship with your bank, they may make the funds available earlier than required by law. But just because you can withdraw the money doesn’t mean the check is good, even if it’s a cashier’s check.
Many scammers are experts at issuing counterfeit or fake checks. When the check bounces, the bank will want their money back. And you’ll be on the hook for the funds.
All fake check scams have one thing in common: The person sending you the check wants you to cash it and send them a portion of the money. By the time the check bounces, they are long gone.
BBB says it happens to tens of thousands of people every year.
Types of fake check scams
Fake checks are used in a number of scams. Here are some examples:
Mystery shopping – Scammers pretend to hire people as mystery shoppers. For example, the shopper is asked to evaluate a money transfer service. They’re given a check and told to deposit it into their bank account before wiring it to someone else. Once they wire the money, the scammer disappears and the check bounces.
Overpayment scams – Scammers place an ad on Craigslist or a similar site, offering to buy an item or pay for a service in advance. They then send the seller a check for an amount higher than the asking price. When the seller brings it to their attention, they ask the seller to return the extra funds, often by purchasing gift cards.
Personal assistants – You answer an online job offer for a personal assistant. The scammer sends you a check and asks you to use the money to buy gift cards for new clients. Once the scammers get the gift card PINs, they empty them, leaving you out of pocket when the check bounces.
Lottery scams – Lottery scams such as the well-publicized Strike Five Mega Lotto scam in California are popular with scammers. They tell people that they won money in a lottery but must first pay taxes and fees before they get their winnings. They receive a cashier’s check and must wire back the funds to cover the taxes and fees.
How to avoid a fake check scam
Here are some red flags to look out for.
- Don’t accept a check for more than the selling price of an item.
- Don’t cash a check and send a portion to someone you don’t know, even if you’re allowed to keep some of the money.
- Anyone who demands payment by gift card is more than likely a scammer.
- If you need to verify that a check is real and not fake, don’t rely on the phone number on the check. If you want to verify the check, find the number on the bank’s official website.
- Look up the number of the company that sent you the check and call them to verify if it’s legitimate.
- Use BBB to search for the name of the company and get more information about it.
- If you didn’t enter a contest, you’re not going to be a winner and receive a check.
- There’s no guarantee that a check from someone you don’t know is legitimate, even if you’re able to cash the check.
- A real lottery doesn’t require a winner to pay money before they can claim their winnings.
- Don’t wire money to people you don’t know.
- Be skeptical of an unexpected check sent to you from someone you don’t know.
Inspect the check and all correspondence
Typos and poor grammar – If the check, emails or text messages contain typos or poor grammar it’s a red flag.
Name of the bank – Not all counterfeit checks will have a legitimate bank’s name. Use FDIC BankFind to locate FDIC-insured banking institutions in the United States. If you’re not dealing with a legitimate bank, it’s a good sign the check is fake.
Mailing address – If the postmark on the envelope isn’t the same as the city and state of the bank, the check is likely to be fake.
Mismatched names – Compare the name of the company posting the check with the name on the check. If they don’t match, it’s a red flag.
Incorrect routing number – Scammers often make careless mistakes such as using a wrong routing number or putting a check number in the top that doesn’t match the one at the bottom.
Suspicious security features – Scammers often produce realistic looking checks that are hard to identify as fake. However, they sometimes struggle to copy security features. Poor quality watermarks, security threads and other security features indicate the check is fake.
Where to report fraud
If you think you’ve been targeted by a fake check scam, report it to:
- Better Business Bureau (details below)
- Your state’s attorney general
- The U.S. Postal Inspection Service (if the check arrived by mail)
- FBI’s Internet Crime Complaint Center (IC3) for internet crime
- The FTC, by calling 877-382-4357 or filing an online complaint
The Better Business Bureau has resources to help consumers and businesses. You can report a scam (whether you’ve lost money or not), file a complaint against a business, leave a review of a business you’ve used and report an ad.
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