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Counterfeit Checks -
What to look for / What to do
If you receive an email or letter in the post /
regular mail saying you won a lottery and they send you
a check? You just won a foreign lottery? The letter says
you did, and all tyou have to do to collect your
winnings is deposit the cashier's check to and wire the
money back to cover the taxes and fees. As soon as the
courier service gets their fee, you’re guaranteed to get
your prize. Or you sold something on Ebay and the buyer
paid with a check? Or you took out a loan from a
distant or online bank and they sent you a check? You
can just take the check to your bank and cash it right?
WRONG! And what is worse, if you cash it, in most states in the US, you
may be guilty of passing a counterfeit check, money laundering or worse.
Clark Howard
did a piece on his radio show about a man in California who was arrested for
cashing a bogus check. In other words, by merely attempting to cash the check,
you could go to federal prison!
The check is no good, even though it appears to be a legitimate
cashier’s check. The lottery angle or eBay buyer, or a potential tenant for your
rental property are just tricks to get you to wire money out of your bank
account to someone you don’t know.
If you did deposit the check and wire the money, your bank would soon (7 to
21 days later) learn that the check was a fake. And guess who is out of the
money? YOU ARE! It is your responsibility to repay the bank, because
the money you wired can’t be retrieved, and you’re responsible for the checks
you deposit — even though you don’t know they’re fake.
ConsumerFraudReporting.org and the Federal Trade Commission both have plenty
of examples and have observed that counterfeit check scams are on the
rise. Many fake checks look so real that bank tellers are reporting being
fooled. The scammers use high quality printers and scanners to make the checks
look real. Some of the checks contain authentic-looking watermarks. These
counterfeit checks are printed with the names and addresses of legitimate
financial institutions. And even though the bank and account and routing numbers
listed on a counterfeit check may be real, the check still can be a fake. These
fakes come in many forms, from cashier’s checks and money orders to corporate
and personal checks. Could you be a victim? Not if you know how to recognize and
report them.
Fake Checks Scams
Counterfeit or fake checks are being used in a growing number of fraudulent
schemes, including foreign lottery scams (as described above), check overpayment
scams, Internet auction scams, and secret shopper scams.
Check overpayment scams
Check overpayment scams target consumers selling cars or other valuable items
through classified ads or online auction sites. Unsuspecting sellers get stuck
when scammers pass off bogus cashier’s checks, corporate checks, or personal
checks. Here’s how it happens:
Classified ad or auction posting
A scam artist replies to a classified ad or auction posting, offers to
pay for the item with a check, and then comes up with a reason for writing the
check for more than the purchase price. The scammer asks the seller to wire back
the difference after depositing the check. The seller does it, and later, when
the scammer’s check bounces, the seller is left liable for the entire amount.
Secret shopper scams
In secret shopper scams, the consumer, hired to be a secret shopper,
is asked to evaluate the effectiveness of a money transfer service. The consumer
is given a check, told to deposit it in their bank account, and withdraw the
amount in cash. Then, the consumer is told to take the cash to the money
transfer service specified, and typically, send the transfer to a person in a
Canadian city. Then, the consumer is supposed to evaluate their experience — but
no one collects the evaluation. The secret shopper scenario is just a scam to
get the consumer’s money.
Con artists who use these schemes can easily avoid detection. When funds are
sent through wire transfer services, the recipients can pick up the money at
other locations within the same country; it is nearly impossible for the sender
to identify or locate the recipient.
Warning signs:
New variations of fake check scams constantly pop up, but in each case they
give you a realistic-looking check or money order and ask you to send cash in
return. Here are some of the common scenarios:
- In person: Scammers befriend you and ask you to cash a check or
money order as a favor.
- Buyers from classified ads, eBay, or your advertisement: They
want to buy something that you are selling and send a check or money order
for more than you're asking. You are asked to send the extra to pay for a
delivery or some other service.
- They hire you to work at home and ask you to deposit checks or
money orders in your account as part of your job. Sometimes they have you
open a new account for the "business", but you're still responsible for any
checks that you deposit.
- They tell you you won a lottery, sweepstakes or inheritance and
send you a check or money order as an "advance" on the millions that you're
going to receive, to use them to "pay taxes", delivery or other fees.
- They offer you a foreign business deal and send you a check or
money order as an advance on your profits.
Examples of Counterfeit Check Scams
- A
lottery in Canada sends you a check
- North
America Millions Jackpot Lottery letter, with "lucky numbers"
You and Your Bank — Who is Responsible for What?
Under federal law, banks must make funds available to you from U.S. Treasury
checks, official bank checks (cashier’s checks, certified checks, and teller’s
checks), and checks paid by government agencies at the opening of business the
day after you deposit the check.
For other checks, banks must similarly make the first $100 available the day
after you deposit the check. Remaining funds must be made available on the
second day after the deposit if payable by a local bank, and within five days if
drawn on distant banks.
However, just because funds are
available on a check you’ve deposited doesn’t mean the check is good.
It’s best not to rely on money from any type of check (cashier, business or
personal check, or money order) unless you know and trust the person you’re
dealing with or, better yet — until the bank confirms that the check has
cleared.
Forgeries can take weeks to be
discovered and untangled. The bottom line is that until the bank confirms that
the funds from the check have been deposited into your account, you are
responsible for any funds you withdraw against that check.
How to Protect Yourself Against Fake Check Scams
Here’s how to avoid a counterfeit check scam:
- Throw away any offer that asks you to pay for a prize or a gift. If it’s
free or a gift, a promotion or a sweepstakes, you shouldn’t have to pay
anything for it. That's the law! Free is free.
- Don't enter foreign lotteries. First, it is illegal to play a foreign
lottery through the mail, email or the telephone, and most foreign lottery
solicitations are phony.
- Know who you’re dealing with, and never wire money to strangers.
- If you’re selling something, don’t accept a check for more than the
selling price, no matter how tempting the offer or how convincing the story.
Ask the buyer to write the check for the correct amount. If the buyer
refuses to send the correct amount, return the check. Don’t send the
merchandise.
- As a seller, you can suggest an alternative way for the buyer to pay,
like an escrow service or online payment service. There may be a charge for
an escrow service. If the buyer insists on using a particular escrow or
online payment service you’ve never heard of, check it out. Visit its
website, and read its terms of agreement and privacy policy. Call the
customer service line. If there isn’t one — or if you call and can’t get
answers about the service’s reliability — don’t use the service. To learn
more about escrow services and online payment systems,
visit this page!
- If you accept payment by check, ask for a check drawn on a local bank,
or a bank with a local branch. That way, you can make a personal visit to
make sure the check is valid. If that’s not possible, call the bank where
the check was purchased, and ask if it is valid. Get the bank’s phone number
from directory assistance or an Internet site that you know and trust, not
from the check or from the person who gave you the check.
- If the buyer insists that you wire back funds, end the transaction
immediately. Legitimate buyers don’t pressure you to send money by wire
transfer services. In addition, you have little recourse if there’s a
problem with a wire transaction.
- Resist any pressure to “act now.” If the buyer’s offer is good now, it
should be good after the check clears.
If You Think You’re a Victim
If you think you’ve been targeted by a counterfeit check scam, report it to
the following agencies:
Quick Summary: What Can you Do?
You can check the name of the issuing bank on the check with the names of
banks that have reported stolen checks
and you can call the bank to
- verify that the account number on the check is legitimate and
- matches the name on the check and
- has sufficient funds.
You can go to this website and
verify the routing number on the check and get the bank's phone number, then
call the bank to verify that the account is real and the check is real.
If you believe you may have fallen victim to this type of scam and wish to
report it, please file a complaint
with the U.S. government
Internet Fraud Complaints
Center
Here is a
summary of this type of fraud, from the United States Postal Service
For More Information
The FTC works for the consumer to prevent fraudulent, deceptive and unfair
business practices in the marketplace and to provide information to help
consumers spot, stop, and avoid them. Click here to file a
complaint or to get free
information on consumer issues, or call toll-free, 1-877-FTC-HELP
(1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing,
identity theft, and other fraud-related complaints into
Consumer Sentinel,
a secure online database available to hundreds of civil and criminal law
enforcement agencies in the U.S. and abroad.
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