Fake Check Scams: What they are and how you can protect yourself

You’ve just posted an item for sale online. You soon receive an email message from a party who is interested in making a purchase. They arrange to send you a check, but then contact you again and claim that they accidentally wrote the check for an amount greater than the purchase price. You are asked to deposit the check and wire them the difference.

When you do, and their check turns out to be fraudulent, you’re not only out the money you wired them, but you also have to reimburse your financial institution for any funds from the check that were deposited into your account.

With so much information available online, it can be hard to believe that anyone would fall for this, and other, “fake check” scams. Yet the Federal Trade Commission (FTC) – an agency set up to protect consumers — receives tens of thousands of fake check reports each year, and that number is on the rise.

With the rise of debit cards and online payment, consumers use checks less frequently to conduct transactions, and that falling familiarity with checks provides a fertile breeding ground for scammers.

The Better Business Bureau (BBB) reports that there were nearly 30,000 fake-check complaints submitted in 2017, costing unwitting consumers almost $38 million. The Postal Inspection Service says it prevented $62 billion worth of fake checks from foreign sweepstakes and lottery scammers from entering the United States that same year.

Scammers go to great lengths to dupe us, according to Fraud.org. The National Consumer League’s site reports that fake checks have become frighteningly realistic. Even bank employees can be fooled by these legitimate-looking phonies that use the same paper stock, logos and markings as the real thing.

Popular fake check scams include (but are not limited to):

• Mystery shopper scams – The BBB says these are the most common fake check scams. Fraud victims receive a letter with a mystery shopper job offer. A fake check is enclosed, which they are told to deposit. They are instructed to wire back the majority of it and to keep the remainder as compensation for their work. Other variations of the scam instruct the victims to purchase gift cards, take a photo of the cards’ numbers and send them back along with their shopping report. The scammers then sell the card information on the black market. While there are legitimate mystery shopping jobs, these scams are insidious because the whole business of mystery shopping implies (and rewards) secrecy.
• Law firm collection scams – A client hires the firm to collect a check from a “debtor”, deduct its legal fee and send the remaining funds to the client electronically.
• Car wrap scams – You receive a legitimate-looking offer to have your car “wrapped” with ads and are promised a weekly payment for doing so. You’re sent a large check and instructed to deposit it, then transfer most of it to the account of the car-wrapping specialist.
• Employment scams – You apply for a job you found online. You are sent a check to deposit, and are instructed to wire the funds to a third party to cover the cost of specialized equipment. This can happen with any job but is especially prevalent in positions for caregivers.
• Sweepstakes/lottery scams – The victim receives a letter claiming they have won a large sum in a sweepstakes or lottery (usually a legitimate or well-known contest). The letter includes a smaller (but still substantial) fake check to cover taxes, etc. The victim is instructed to deposit the fake check, then wire those funds to a third party.

Do you see a theme here? Depositing unexpected checks with the requirement to return some of the funds is never a good idea.

How can you protect yourself from fake check scams? The FTC offers tips to protect yourself. They include ignoring any offer that requires you to pay for a prize; refraining from entering foreign lotteries; never wiring money to strangers; and insisting that any check you accept as payment be drawn on a local financial institution or one with a local branch. This way, you can verify the validity of the check before you deposit it.

If you’ve been victimized in a fake check scam, report your experience to the FTC, the U.S. Postal Inspection Service, or your Attorney General.

(Infographic credit: FTC.gov, and ABA Foundation)