Don’t think bogus check fraud can happen to you? Think again.
In 2015, 25.6 million Americans were victims of fraud.
They were of all ages, genders, lifestyles, and education levels, but had one thing in common: they all experienced tragic financial losses.
Many of these cases occurred, or at least began, online.
“The internet is inundated with thieves that have fine-tuned their fraudulent tactics to gain your trust and get you to drop your guard,” says Gerald Rivera, risk operations specialist for State Employee’s Credit Union. “Thousands of people have lost thousands of dollars because of internet fraud.”
According to Rivera, one online fraudulent activity in particular is becoming a favorite of cyber criminals: the counterfeit check scam.
Fraudsters use numerous online sites and tactics to initiate a fake check scam (we will discuss the most popular schemes in a moment), but typically, the process goes like this:
A victim receives a counterfeit check (he or she is unaware that the check is fake) with instructions to deposit it and then return a portion of the deposited amount to the sender, either by personal check, cash, or wire transfer.
*In some cases the fraudster, with permission from the victim, will mail a fake check directly to the victim’s financial institution for direct deposit. More often, however, the victim is persuaded to make the deposit in-person.
The victim, believing it is a legitimate transaction, makes the deposit. Everything looks normal—the fraudster forged the check with real routing and account numbers he or she hijacked from various sources (stolen mail is the most common)—so, the check clears.
It isn’t until long after the victim has sent the money, as instructed, back to the sender that the check is discovered to be a fake.
Now here is where the victim loses money: The bad check is returned to the victim’s bank and money is withdrawn from his or her account to cover the loss.
Dwayne Herrera, executive vice president of State ECU, says the credit union accepts all checks from members in good faith because of the good relationships it has with its members, but he cautions: “We can’t be certain a check is good until it clears with bank of origin. If a check is returned to us for any reason, the member’s account will be debited for the amount of the check plus any applicable fees.”
The harsh reality is that someone has to pay for the bounced check, and sadly, it’s usually the victim. These scams are rarely prosecuted simply because it’s difficult to identify the perpetrators. “It’s imperative that people be proactive and stop check fraud schemes before they happen. Otherwise, they’ll be the ones taking the loss,” Rivera says.
Most Popular Fake-Check Scams
As mentioned, there are numerous ways criminals persuade people to deposit bogus checks. Here are the most common schemes and tips for spotting them:
In this scenario, you get “hired” for a job advertised online. You haven’t met your new boss in person yet, but he wants to pay you in advance, or maybe send you money so that you can purchase supplies you will need for the job. You receive a check and are told to cash it, keep some of the money, and then deposit the rest into a designated account. (Or give it to a third party to buy supplies.)
Don’t be fooled: No legitimate company will pay you for work you haven’t done yet, let alone give an advance to someone they’ve never met in person. Also, if supplies are needed for the job, the company should provide them to you.
Lottery or Prize Scam
You receive an unexpected notice (letter, phone call, text, or email) that you have won a large sum of money in a lottery. To collect your winnings you must pay taxes on them upfront, but don’t worry—the company will send you a check to cover the bill. You just need to cash the check and then wire them back the money.
Don’t be fooled: First, it’s impossible to win a lottery you didn’t enter. Second, no real lottery or gaming organization requires winners to pay—even in taxes—for a prize.
Overpayment for Purchase Scam
You sell an item online on a well known website like Craigslist or eBay. The buyer sends you a check, but it has been made out for more—usually much more—than the sale price. You inform the buyer of the error, and he or she tells you to just cash the check and send back the difference. That, or give the overage to a third party he or she’s asked to pick up the sale item. No big deal, right? Wrong.
Don’t be fooled: Be extremely wary of any offer—in any context—of a check or money order that’s for more than the amount you are owed. No real company, or person of average intelligence, would overpay you.
Online Dating Scam
This is perhaps the most manipulative—and heartbreaking—counterfeit check scam. Here’s how it works: you’re contacted online by someone who appears romantically interested in you. You begin chatting and learn that he or she lives or is traveling abroad. The connection feels promising, however, so you continue messaging. For weeks, even months, you may chat back and forth, forming a connection. Once you’re smitten, he or she pops the question. “Can you wire me money?” That, or you’re asked to cash a check on your paramour’s behalf, since he or she is out of the country.
Don’t be fooled: Be suspicious of rapid escalation, especially when it comes to discussion of finances. Other red flags are an unwillingness to meet (or constantly rescheduling due to “emergencies”), he or she claims to be from the U.S. but is traveling or working overseas, and hasty professions of love.
Additional tips for protection
Verify the check
If you’ve received a check and are suspicious of it, contact the bank printed on the check to verify the date, account number, amount, and payee. Note: some fake checks will have a legitimate company’s actual bank, account number, and routing number. Therefore, call the company using a phone number you obtain. Do not use any phone number that appears on the check or in any instructions you receive.
Trust your gut
If you feel uncomfortable—even the tiniest bit—about cashing the check, don’t do it.
Know the signs of a bogus check scam
The above scams all contain three similar characteristics:
You are mailed a check
This seems obvious, but it’s important to remember, especially because many fake checks look extremely real. Check scammers are often skilled forgers.
You’ve never met the sender in real life
If you do not know the person who sent you the check, you’re probably being duped.
You’re asked to send, or wire, some or all of the money back
This is a huge red flag. Think about it: why would someone send you money, just to have you send it back? It makes no sense.
Know the general telltale signs of online fraud: bad grammar and typos
Digital criminals may be adept con artists, but grammarians they are not. Many scams, especially those initiated by email, are riddled with grammatical errors and typos, and often look sloppy and unprofessional.
What to do if you become a victim
In the unfortunate event that you do become a victim, there are several steps you should take.
File a police report
Even if law enforcement is unable to identify the suspect, a police report will provide you with an official record that may help you mitigate financial losses. It can’t hurt to file a report, in any case.
File a complaint with the Federal Trade Commission
You can file a complaint online here.
Close your account (if necessary)
If you gave criminals your account and routing number, cancel that account immediately.
Discontinue communication with the scammer
But save any correspondence you have—emails, texts, letters, voicemails, etc. They may serve as evidence down the road.
We’ve got your back
If you suspect you’re being scammed, but would like a second opinion before you act, call Gerald Rivera, risk operations specialist, at (505) 983-7328 ext. 3309.
Sidebar item: Important Facts About Returned Checks
- Legitimate checks marked “non-sufficient funds,” take, on average, 3-4 business days to be returned.
- Counterfeit checks are not detected until about 12 days after the check has cleared. By law, victims of check fraud have 60 days from their statement date to dispute a transaction.
- Stolen or altered checks can be returned up to 1 year from processing.
- Fraudulent checks can be returned up to 3 years from processing.