What Is A Fake Check Scam?

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I get asked this a lot.  What is a fake check scam?  Let me explain.

what is a fake check scamAren’t you the lucky one?  You’ve just found out that you won a foreign lottery!  Woo!  Hoo!  The letter you received says so and the cashier’s check to pay for the fees and taxes are included.  All you’ve got to do to collect your winnings is deposit the check into your bank and wire the money back to the sender to pay for the fees and taxes.  You are given a guarantee that, when they receive the money, you’ll receive your prize.

Isn’t that awesome?  No.  It’s a scam.  The check is fake and even looks like an authentic cashier’s check.  The whole lottery story is a gimmick to have you wire money to a stranger.  If you would have deposited the check and wired the money, your bank would in due time figure out that the check was fake.  On top of that, you would lose your money because the money you sent can’t ever be traced or retrieved.  And, here’s the icing on the cake, you are held accountable for any checks you deposit – even if you didn’t know the check was a fake.  This is just one instance of a fake check scam that might have you scratching your head.

what is a fake check scamAccording to the United States Federal Trade Commission, the country’s agency to protect consumers, they want everybody to know that fake check scams are rising.  Some bogus checks are so incredibly real looking that bank tellers are disclosing they can’t tell the difference.

The scammers make use of high quality scanners and printers to make checks seem authentic.  Some of the checks have genuine-looking watermarks and are printed with names and addresses of authentic financial institutions.

Despite the bank account and routing numbers on the bogus check being possibly real, the check itself is fake.  These bogus checks come in many types, from money orders and cashier’s checks to personal and corporate checks.  Are you at risk? Not if you understand how to spot and report them.

More Fake Check Scams

Fake or counterfeit checks are used in an increasing amount of scams including foreign lottery scams, mystery shopping scams, internet auction scams and check overpayment scams.

Mystery Shopping Scams

what is a fake check scamWith mystery shopping scams, the person who’s been hired as a mystery shopper is asked to assess how effective a money transfer service is.  The person is given a check and instructed to deposit it into their personal bank account and then withdraw the same amount.

Then, the person is instructed to take the cash to a particular money transfer service and, usually, wire it to somebody in Canada.

Finally, the person is supposed to assess their experience but no one cares about the assessment because nobody ever collects it.  The mystery shopper scenario is a scam to get their hands on a person’s money.

Overpayment/Internet Auction Scams

Overpayment check scams target people selling cars or other expensive items via online auctions or classified ads.  Naive sellers are left holding the bag when scammers fob off fake personal checks, corporate checks or cashier’s checks.

Here’s how it goes down:

A scammer answers an auction posting or classified ad and wants to pay for what’s being sold with a check.  Suddenly, they dream up a reason for writing out the check in a larger amount than the purchase price.

The crook then requests the seller to wire the difference back to them once the check has been deposited.  The seller does as instructed and down the road the crook’s check bounces and the seller is left having to pay the entire amount back to the bank.

Scammers who use these tactics can very easily avoid being detected.  When money is sent via wire transfer services, the receiver can pick up the funds at one of countless locations across the country.  It’s practically impossible for the person sending the money to identify or even locate the receiver.

The Bank. Who Is Accountable For What?


According to U.S. federal law, banks typically must make funds accessible to you from official bank checks (teller’s checks, certified checks and cashier’s checks), U.S. Treasury checks and nearly all other governmental checks, one business day after you  have deposited the check.  With regard to other checks, the bank is required to make the first $200 accessible one day after you have deposited the check, and then the remaining funds are required to be accessible on the second business day after the check was deposited.

BUT, just because the money is available on a check that you’ve deposited does not mean it’s good.  As a rule, it’s a good idea not to rely on cash from any kind of check be it a money order, business or personal check or cashier’s check unless you know who the person is and trust them.  Better yet, don’t use the money until the bank has confirmed the check cleared because forged checks can take weeks to discover.

The bottom line is this.  Until the bank finally confirms that the money from the check has been deposited into your account, you are accountable for anything you withdraw against the check.

Check out this recording to find out more:

 

 

How To Avoid A Fake Check Scam


  • Toss out any offer that requests you to pay for a gift or prize.  If it’s a gift or free, you should not be required to pay for it.  Free is free.
  • Resist the temptation to take part in foreign lotteries.  It is illegal to play a foreign lottery either by phone or through the mail and a majority of foreign lottery offers are scams.
  • Know who you are doing business with and NEVER, EVER wire money to somebody you don’t know.
  • If you sell something, whether it’s an online auction or classified ad, DO NOT ACCEPT a check for more than what you’re asking, no matter how persuasive the story is.  Ask the purchaser to give you a check for the right amount.  If the purchaser refuses to do so, give them back the check and don’t send or give them the merchandise.  As  the seller, you can offer alternative ways for the purchaser to pay, such as an online payment or escrow service.  (Note: there might be a charge for an escrow service.  Simply visit  its website and read its privacy policy and terms and conditions.  Dial the customer service number.  If they don’t have one or if you phone and cannot get answers regarding the reliability of their service, don’t use them.)
  • If you choose to accept payment by check, require that the check be drawn on a bank that is local or has local branches because you can visit them personally to make certain the check is legit.  If it’s not possible, phone up the bank where the check had been purchased and simply ask it if is authentic.  You can get the bank’s phone number on an online website you trust or by calling directory assistance NOT from the person who gave you the check or the check itself.
  • If the purchaser insists that you wire them back the funds, instantly end the transaction.  Genuine purchasers do not pressure you to send funds via wire transfer services.  Also, you have a fat chance for any recourse if a problem occurs with the wire transaction.
  • Resist any pressure to act right away.  If the purchaser’s offer is good now, it will be just as good after the check goes through.

The Bottom Line


If you believe you’ve been a victim of a fake check scam, report it immediately to:

So, I hope by reading this article, “What Is A Fake Check Scam?,” you will be able to spot and avoid being scammed.  Have you ever been a victim of a fake check scam?  I’d love to hear from you.  Please leave your comments below.

 

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~Barb

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6 Comments

  1. Chris

    I have received these before and thankfully have avoided getting mixed up in it.

    However, I wanted to ask you, when it comes to you bank. I know you say to allow the check to clear. How will I know that the check has cleared from my banks side? Is that something that I have to check with them?
    My online banking shows a check being cleared the next day.

    • Barb

      Hi, Chris!  Thanks for dropping by and sharing.  I really love hearing from my readers.

      I’m so glad that you have not been a victim of this scam.   Good for you!

      With regard to your question, once you deposit a check, the money is made available to you within 24 hours, but that does not necessarily mean that the bank has verified the check. That could take weeks.  It’s best to contact the bank directly.  I would actually go in person if that’s possible.

  2. Weston

    Thank you for this information! It is always nice to be made aware of any scams that are going around. I have not heard of this one until reading your post.

    Scams like this make me very angry to know that there are people out there who try to deceive, lie, and cheat to get people’s hard earned money. It makes me sick.

    Thank you for sharing!

    Weston

    • Barb

      Hi, Weston!  Thanks for dropping by and sharing.  I love to hear from my readers.

      I’m so glad I was able to educate you on this type of scam and avoid being a victim of it.  

      There are always going to be unscrupulous people out there.  My aim is to keep the discussion going in order to help as many people not fall victim to them.

  3. Angela

    Hi, Barb! This is fantastic information for everyone to know! I used to work as a bank teller so was trained to recognize fake cheques and scams but the average person doesn’t have that training. One time I did catch a fake cheque that a customer tried to deposit! Whew! Thanks for educating folks about this topic!

    • Barb

      Hi, Angela!  Thanks for dropping by and sharing.  I really love hearing from my readers.

      Yes, these fake checks are now so convincing even trained bank tellers are having a hard time determining a fake check.  Scammers use high-quality scanners and printers.  They’re pretty sneaky.

      Good for you that you were able to spot it.

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