Fraudsters Cash In on Fake Check Scams

Writing a check

Even in this age of high-tech trickery, one classic con continues strong: The gotcha that results from any number of scams that involves a fake check or money order.

Last year, fake checks once again ranked as number one on the "Top Scams" list by the National Consumers League and recently, they've been on the increase in some parts of the U.S.

But no matter where you live, they remain the route to rip-off in some of the most prevalent schemes preying on older Americans.

Maybe it's for "winning" a lottery or sweepstakes. Perhaps "payment" for merchandise sold online, or to work as a mystery shopper or another job. Or even a promise that you qualify for "free" government money or an inheritance from a relative you never knew.

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No matter the cover-story claim - and there are many - the scam goes like this:

You receive a check - unexpectedly or after responding to an offer made by email, phonecall or U.S. mail. Instructions are to deposit the received check in your bank account and then forward back some portion, often by wire transfer: You may be told it's to pay for taxes or processing fees, because it's a higher payment than the selling price of sold merchandise, or another lie.

What happens? Although the deposit initially is credited to your account, your bank is really fronting that money; it actually takes up to two weeks for the bank to authentic the check and collect those funds.

When the check turns out to be counterfeit - as it always does in such scams - you're on the hook for all money drawn from its deposit. That includes the amount forwarded...along with legitimate bills paid with its funds. You may even face criminal charges for check fraud or have your bank account frozen.

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Click here for clues to spot a fake check.

Also know this:

  • In most schemes, the bogus check is an amount below $5,000. Reason: Scammers know federal law requires that deposits under $5,000 be "made available" to customers within five days - the reason it may quickly show as a "credit" in your account. Conversely, checks of $5,000 or more have a longer "hold" period, meaning the bank can wait longer to credit your account. Technically, money is not in your account - free and clear - until the bank confirms that "funds have been collected." (When in doubt about any deposit, ask for that phrase.)


  • The forwarded amount is often requested by wire transfer - or via a prepaid debit card - because that also helps scammers. Wire transfers can be redeemed anywhere in the world once the recipient knows its confirmation number. So even though you be instructed to send that transfer to a provided address in Anywhere U.S.A., the fraudsters may be located (and get your transfer) in Nigeria, Russia or who-knows-where. Prepaid debit cards can also be used most anywhere.


  • Realistically, why would you receive a check and then be asked to return some portion? In authentic lotteries, taxes are deducted from winnings before you see one dime. Legitmiate jobs don't cut checks and then ask for a portion back. Why would an online buyer pay more than the selling price -- or not use a more purchase-protective credit card, to boot?

Your wisest move: Assume that any unexpected, higher-amount, or forward-back-some-portion check you receive is fraudulent - and best deposited in the trash rather than your bank.

Photo: David Goehring/Flickr

For information about other scams, sign up for the Fraud Watch Network . You'll receive free email alerts with tips and resources to help you spot and avoid identity theft and fraud and gain access to a network of experts, law enforcement and people in your community who will keep you up-to-date on the latest scams in your area.

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