Fake Check Scams - Frequently Asked Questions
(Information from the National Consumers League at www.fraud.org)
How do fake check scams work?
There are many variations of the scam. It usually starts with someone offering to do one of the following:
- Buy something you advertised for sale;
- Rent a room from you;
- Pay you to work at home;
- Give you an “advance” on a lottery or sweepstakes you’ve won;
- Give you the first installment on the millions you’ll receive for agreeing to transfer money in a foreign country to your account for safekeeping.
The scammers often claim to be in other countries and say it’s too difficult to pay you directly, so they’ll have someone in the U.S. who owes them money send you a check or money order.
The amount of the check or money order may be more than you’re owed, so you’re instructed to deposit it and wire the rest to the scammer or to someone else. In some cases, the scammer promises to transfer money directly to your account. You provide your account information for an electronic funds transfer. Instead the crook sends your financial institution a phony check or money order with instructions to deposit it to your account. When you check your balance, it looks like the funds have arrived. Whatever the set-up, the result is the same – after you’ve wired the money, you find out that the check or money order has bounced.
Can my financial institution tell if the check or money order is good or not when I deposit it?
These fakes look so real that even financial institution tellers may be fooled. Some are counterfeit money orders, some are phony cashier’s checks, and others look like they’re from legitimate business accounts. The companies whose names appear may be real, but someone has dummied up the checks without their knowledge.
Under federal law, financial institutions must make the funds you deposit available quickly – usually within one to five days. But just because you can withdraw the money doesn’t mean the check is good. Your financial institution generally has no way to determine whether the deposited check has cleared until it is returned. Forgeries can take weeks to be discovered./p>
If the check or money order turns out to be fake, isn’t that my financial institution’s problem?
You are responsible for the checks and money orders you deposit. That’s because you’re in the best position to determine how risky the transaction is – you’re the one dealing directly with the person who is arranging for the payment to be sent to you. When a check or money order bounces, you owe your financial institution for the money you withdrew. The financial institution may be able to take it from your accounts or pursue collection action to recover it. In some cases, law enforcement authorities could bring charges against the victims because it may look like they were involved in the scam and knew the check or money order was counterfeit.
How can I protect myself from fake check scams?
There is no legitimate reason for someone who is giving you money to ask you to wire the money back – that’s a clear sign that it’s a scam. If a stranger wants to pay you for something, insist on cash or an electronic transfer for the exact amount. If you think someone is trying to pull a fake check scam, don’t deposit the check and report your concern to your financial institution.
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