Scammers know how to design phony checks to make them look legitimate. Fake checks drive many types of scams – like those involving phony prize wins, fake jobs, mystery shoppers, online classified ad sales, and others. In a fake check scam, someone asks you to deposit a check – sometimes for several thousand dollars – and, when the funds seem to be available, wire the money to a third party. The scammers always have a good story to explain the overpayment – they’re stuck out of the country, they need you to cover taxes or fees, you’ll need to buy supplies, or something else. But when the bank discovers you’ve deposited a bad check, the scammer already has the money, and you’re stuck paying the money back to the financial situation. So don’t deposit a check and wire money or send money back in any way.
Financial Institutions must make funds from deposited checks available within days, but uncovering a fake/fraudulent check can take weeks. If a check you deposit comes back as fraudulent – even after it seemed to clear – you’re still responsible for repaying the financial institution. This holds true for all checks, money orders and cashier’s checks as well.
How can I protect myself?
To avoid fake check scams, follow these tips:
- Don’t “keep the change. “No legitimate company will overpay you and ask that you wire the difference back to the company or to some third party. Be extremely wary of any offer – in any context – to accept a check or money order in an amount greater than you are owed.
- Don’t cash the “unexpected” check. Companies rarely if ever send checks without a legitimate explanation of why the check was issued. Unless you are expecting the check – and you are absolutely certain it is meant for you – do not cash it.
- Call the company directly to verify the check. Remember that some fake checks will have a legitimate company’s actual account number with the correct bank routing number. Call the company directly to verify the check, using a telephone number you obtain on your own from directory assistance. Do not use any telephone number that appears on the check or in any instructions you may receive.
- Fake check scams typically have a number of red flags, such as:
- Typos: Watch out for online postings or emails that are riddled with typos and poor grammar.
- Mismatched names: Compare the name of the person or company posting the opportunity with the name on the check you receive – and beware if they don’t match.
- Pressure to act quickly: Be aware that it can take 10 days or even more for your bank to determine that a check is counterfeit. Don’t wire or transfer funds until you have verified with your bank that the check has cleared – even if the bank allows you to withdraw the money sooner.
If in doubt, bring it by and we will be happy to help you determine if the check is valid.
Information provided by FINRA -2018 & Lisa Lake, FTC 2017