[custom_frame_left][/custom_frame_left]State Employee’s Credit Union is committed to protecting your savings and checking accounts. We believe that knowledge and awareness play an important role in protecting yourself from scams and fraudsters trying to separate you from your money. I’d like to share with you some of the scams that we’ve seen at our credit union in hopes that you don’t fall victim to any of them or any new creative scams that fraudsters are sure to come up with in the future. Please feel free to share this with your friends and family so they are armed with the knowledge to protect themselves – don’t be a victim!
We’ve seen quite a few scams but the most popular include: bogus lottery “winnings,” large dollar “overpayments” for internet purchases requesting “cash back,” privately sold automobiles, inheritance from an unknown party, mystery shopper scams, and work from home scams. What all these scams have in common is they send you money, typically a counterfeit cashier’s check or money order, have you deposit or cash the item and ask that you wire back most of the funds. Any unknown entity that asks you to wire back some of the funds they sent you ends in you giving them good money for fake money.
So how do fraudsters get away with using phony checks? To understand that it’s important that you understand a little bit about how banking works. First of all, when you deposit or cash a check, a financial institution doesn’t know if it’s good unless it’s drawn on their bank. Fraudsters are very good at making fake checks so the check itself won’t set off any red flags. Fraudsters typically use a large business account and then copy their bank account number and routing number to make their own checks. They use the same check stock banks use so it looks more professional.
Here’s the real kicker – that check will go through and clear that business account, depositing the funds into your account. In today’s electronic world the clearing process takes about 2 or 3 days. Most businesses reconcile their accounts online and find errors within 7-10 days and then file a dispute. As a consumer or business owner, you have 60 days, by law, to dispute an item that is charged to them that they didn’t authorize (you will want to check billing rights on your bank statement to find out your institution’s dispute policies).
On average, a counterfeit check takes about 10-12 working days to be returned to the bank who then debits your account as the responsible party. So eventually, you or your bank will realize that it was a fraudulent check.
But if you’ve already withdrawn and wired the funds they are GONE. You can’t reverse a wire and there is no insurance that protects you.
These scams only work because the fraudsters are able to get consumers to wire good funds before the fraudulent check is discovered and disputed. The wired funds are quickly transferred to foreign bank accounts, outside the jurisdiction of the US law enforcement.
The bottom line is that you should never accept funds from a source that you don’t know and trust. If you think you’ve been the victim of fraud, be sure to speak with a credit union representative.
By Dwayne B. Herrera – Executive Vice President, State Employee’s Credit Union