Is that a Fake Check? How to Avoid Check Fraud

Check fraud is a criminal act that involves the exchange of real money or property for a counterfeit check. The fraudster often creates a sense of urgency, leaving their victims with little time to think rationally. By the time the victim realizes the deception, they may have lost significant amounts of money, with no means of recovery.

The crux of check fraud lies in the victim providing real money to the fraudster before the check has cleared with the receiving financial institution. It’s crucial to remember that any check you receive must clear with your bank or credit union before the funds are available to you. Checks can take several days to clear, so withdrawing cash immediately after depositing a check means you’re withdrawing your own money, not the funds provided by the check issuer.

Fraudsters often establish a relationship with their target before committing fraud. They build trust through phone conversations or social media interactions, assuring their victims that they represent a legitimate organization or individual. Fraudsters are skilled at creating convincing illusions, but with awareness and vigilance, you can prevent them from defrauding you.

 

HOW DO PEOPLE GET AWAY WITH CHECK FRAUD

Fraud tactics are continually evolving, but check fraudsters often rely on a few common scams:

 

You’ve won the lottery!

In this scenario, you’re informed that you’ve won the lottery and a check is on its way. However, you never actually entered the lottery. You call the provided phone number, and the person on the other end confirms that you are indeed a winner. They instruct you to cash the check immediately upon receipt and send the amount back to cover taxes on the winnings. Once you do that, they promise to send you the full lottery check. Unfortunately, there was no lottery, and the money you sent back is now in the hands of the fraudster.

 

 

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This scam follows a similar pattern to the lottery scheme. Here, the fraudster requests your banking information to deposit the loan into your account. Instead of depositing real money, they make a counterfeit deposit for an amount higher than you requested and demand that you return the excess. They often claim the deposit was “more than you qualified for” and insist you return the money immediately. This scam preys on individuals who may already be financially vulnerable and seeking assistance.

 

Oops, I wrote in the wrong amount. Would you send me the change?

This scam can cost you both your property and your money. In this scenario, the fraudster is your customer. You’re selling something online, and they contact you to purchase the item. They send you a check for more than the purchase price. They claim to have written the check for the wrong amount and ask you to deposit it and return the excess money. If you act quickly, sending the overpayment back to the fraudster along with the item they “purchased,” you could lose significantly in this scam.

 

HOW CAN YOU PROTECT YOURSELF?

The prevailing wisdom when it comes to any kind of fraud is this: If it seems too good to be true, it probably is. If you’re offered something that seems undeserved and your instincts tell you something is off, step back and thoroughly investigate the person or company before sending money.

There are also some common red flags that should alert you to potential fraud:

• The price or deal is too good to be true
• You are asked to wire money
• A sense of urgency is causing you to rush
• The person or institution that has requested the money is unfamiliar to you
• You are asked to pre-pay taxes or fees for a contest or prize

The best way to protect yourself from check scams is to stay calm and never wire money or send cash to people you don’t know or trust. Reputable businesses and institutions will not pressure you to send money quickly. You always have time to research the company that has contacted you.

If you sell things online, closely examine checks and note whether they are made out by the person who requested the item. Ensure the check is made out for the correct amount and, if it isn’t, return it and request a corrected check before mailing the item. You can further protect yourself by using an online payment service and/or accepting checks only from local banks.