Fake and Forged Check Scams: Did You Receive a Check? Don't Cash It!

You Won a Lottery, Got an Award, or a Mystery Shopper Job and They Sent You a Check!
Counterfeit Cashiers Checks

If you receive an email or letter in the post / regular mail saying you won a lottery and they send you a check? 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!

Here is an actual example:

I got a letter in the today from Imperial Foundation Lotto, apparently in Canada, claiming that I have won, an enclosed check for, $2,998.60. The check is from a sponsoring company named "Aaron Industries, Inc., 11865 South Alemeda Street, Lynwood CA, 90262". In the letter it goes on to explain that I need to call for check verification and other details to claim my "prize money". This is an obvious scam and I wanted to bring this to your attention so no one gets caught up in this. The Imperial Foundation Lotto does not have an email address any where the net that I can find. Please let me know if I can give you any more info.

Click here to see a scan of a real scam letter and check received from "International Lotto Inc" in the mail. And this page has another example, from "International Sweepstake".

Here is a unclaimed sweepstakes winnings check and letter received in the mail in 2008.

And here is another report, received February 20, 2008:

I got a letter from a "Security Capital Market Research" requesting that I be a secret shopper.  They mailed a check in the amount of $3,800 to cover my pay, moneygram evaluation, the service charge and fees for shopping.  I deposited check and once my bank cleared  it I moneygramed money to them and  a week later their check bounced.  Now I have to repay back my bank!

Usually, the scammers will claim that you have to use the money from the first check to pay "fees" and "taxes" before you get the big payout. Gullible people assume that since they receive a real check (counterfeit) it must be legitimate.  Remember, ANYONE can print a check, that doesn't mean that the account is real or the money is there!

The "you won our lottery" scam is the most common means used by these scammers, but you must be suspicious of ANY check your receive from an unknown or unexpected source.

The counterfeit cashier's check scheme also targets individuals that use Internet classified advertisements, such as Ebay, to sell merchandise. See this page for more information.

And Comparison Shopping Solutions is another check scam.

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

More Information: How does the fake check / cheque scam work?

The check is no good, even though it appears to be a legitimate cashier's check. The lottery or Ebay seller or "payment transfer" job angle is a trick to get you to wire (Western Union or MoneyGram) money to someone you don't know.

If you deposit the check and wire the money, your bank would soon (several days to as long as 6 weeks) learn that the check was a fake. And when the check finally clears the system and bounces, you're out the money because

  • the money you wired can't be retrieved, and
  • you're responsible for any check you deposit ' even though you can't know whether they're fake or genuine.

These are very important points.  The checks may look real and even have real account numbers on them.  Your bank may be able to confirm that the bank it is drawn against is real and the account is also real.  But that does not mean that the check itself is genuine.

For example, it could be a simple forgery.

  • Someone stole the blank checkbook and write forged checks. 
  • Or a criminal stole checks that were delivered to a person's mailbox.
  • Or a criminal, working as a clerk in a store, copied down your account number and bank when you paid by check, and used this information to make forgeries.

See the movie "Catch Me If You Can", starring Leonardo DiCaprio, for a good example of how this was done even 40 years ago.  Modern computer, scanner and printer technologies make it very easy for criminals to make real looking forged checks.

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:

  • cashier's checks
  • money orders
  • corporate
  • personal checks.

This is just one example of a counterfeit check scam that could leave you scratching your head. The Federal Trade Commission, the nation's consumer protection agency, wants you to know that counterfeit check scams are on the rise.

Fake Checks: Variations on a Scheme

Counterfeit or fake checks are being used in a growing number of fraudulent schemes, such as:

  • foreign lottery scams (as described above),
  • check overpayment scams,
  • Work from home scammers (eg. payment transfer manager)
  • Internet auction scams, and
  • secret shopper scams.

Check overpayment scams

These 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:

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

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, like Western Union, 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.

Isn't the Bank Responsible to Verify the Checks?

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.

Actions to Protect Yourself

Here's how to avoid a counterfeit check scam:

  • Don't pay by check! Credit cards are much safer.
  • Never pay any "fees" for prizes. Throw away any offer that asks you to pay for a prize or a gift. If it's free or a gift, you shouldn't have to pay for it. Free is free.
  • Do NOT to enter foreign lotteries. It's illegal to play a foreign lottery through the mail or the telephone, and most foreign lottery solicitations are phony.
  • Never wire money to strangers.  If a "lottery", "promotion" or 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.
  • 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.
  • Use Escrow Services: 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, see this page.
  • Only take checks from local banks - 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.
  • Resist any pressure to 'act now.' If the lottery is real or 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:

How to Avoid Having Your Checking Account Being Used by a Scammer

One of the reasons the phony check scams are often so successful is the scammers steam checks and checking account numbers of real accounts then use them to make the phony checks.  Because the account numbers are real, the banks often don't catch the scam at first.  The names are only matched with the account numbers later, when the real account holder gets the cancelled check. There are some simple steps you can take to avoid having your account used by a scammer:

  1. Print your own checks as you need them. If you print your own checks, you can avoid this completely. Quicken and Microsoft Money allow this.
  2. Use electronic bill payment through your bank, credit union or the payee.
  3. If you have your checks ordered through your bank or credit union, don't have them mailed to your home; tell them you want to pick them up at the bank.
  4. Get a locking mailbox. Since most checks are mailed to your home, scammers steal them from your mailbox.
  5. Use credit cards instead of checks.
  6. Use Secure Check Stock ' When ordering new checks, select the designs with all of the following security features that are available:  Copy Void Pantograph, Zoom Micro printed border, Chemically reactive Check Paper, Water Marks.
  7. Control access to checks ' Keep your blank checks in a locked place, deposit mail containing checks directly in a government mailbox, shred old checks, don't carry your check book with you.
  8. Review your bank statements carefully!

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 FTC Fraud Reporting 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.

 

 

For a comprehensive list of national and international agencies to report scams, see this page.