March 24th, 2021 by GSC Customer Care
Fraudsters are smart and know a good thing (for them) when they see it. That’s why, even though paper checks aren’t used much anymore, fake check scams are still widespread. Here we explain why fraudsters employ fake check scams, how they work, and what you need to do to protect yourself.
Risky but Profitable
Those who execute fake check scams are taking a risk. If they’re caught for check fraud, they can face jail time and criminal fines. They may also have to pay restitution to their victims. Given that the median amount lost per reported fraud is about $2,000, fraudsters who have fooled many people with this scam could be in for a large financial hit. According to the Federal Trade Commission (FTC), “People reported more than 27,000 fake check scams in 2019, with reported losses topping $28 million.” Additionally, “Fake checks are on the rise—they’re up by about 65% over 2015 levels. What’s more, no other fraud among last year’s top 10 most frequently reported scams came close to the individual losses people reported on fake check [scams] last year.” So, why do fraudsters take the risk of being caught? They have a lot to gain. According to an AARP article, “These scams remain popular with fraudsters because they’re easy to pull off. With the help of a scanner and a good printer, a crook can fabricate a bogus check…that’s hard to distinguish from the real thing.”
How This Scam Works
Let’s say you’re looking for a job and someone sends you an email saying, “We’d like to hire you and send you advance payment via check.” While it sounds a little weird, you really need the work, so you agree. You receive the check and see that it’s for more than the agreed-upon amount. The check writer tells you it was a mistake and asks you to wire the difference back to them. Because it can take days or even weeks to process checks, your bank informs you sometime later that the check was bad, and your bank account is being reduced by the original check amount. That means the cash you sent to the check writer is from your own funds, that person is long gone, and you’re out that money with no way to get it back. The AARP article explains that a similar scenario can ensue in any of the following situations:
- You place something for sale online and you agree to allow the buyer to pay you with a check.
- You receive a check along with a letter stating you’ve won a foreign lottery, but in order to claim your winnings you must wire a portion of the check back to cover taxes and fees.
- You’re offered a government grant or scholarship in the form of a check that includes “extra funds” for taxes or processing.
All these situations have two things in common, according to the FTC: a paper check to deposit and a phony reason why you need to pay some of it back.
Take Steps to Protect Yourself
To avoid becoming a victim of a fake check scam, know what to look for. If someone you don’t know sends you a check from out of the blue, don’t cash it. If anything seems fishy about any transaction you’re trying to complete, back out of it. If you do decide to trust someone you don’t know well to pay you by check and it’s over the amount you agreed on, don’t accept it.
Here are some other tips from the AARP:
- Ask for checks to be drawn on local banks or banks with local branches. That way, you can visit the bank to make sure the check is legitimate.
- If you receive a check from an out-of-town bank, call the bank before you deposit the check to make sure it’s genuine.
- Examine checks carefully before depositing them. You may catch an error like an incorrect routing number.
- Wait at least two weeks and call your bank to make sure the check has cleared before you spend money from it.
However, in this age of so many options for electronic payment, there’s no good reason to allow someone to pay you by check unless you know and trust them. Online marketplaces where you might sell items typically have their own payment systems. Otherwise you can request payment via a peer-to-peer payment service like PayPal.
What to Do if You Become a Victim
If you wire money to a scammer, call the money transfer company immediately to report the incident and file a complaint. Ask if it’s possible for the money transfer to be reversed (but be aware it’s unlikely this can happen). If you paid a scammer with a money order, contact the company that issued it to see if you can stop the payment. You can also try to stop the delivery of it if you sent it via a delivery service or the U.S. mail. The number to call for the U.S. Postal Inspection Service is 877-876-2455.
You can also try to get help from your bank. Notify them as soon as possible, explain the situation, and see if you can get some or all of the lost funds back.
Additionally, consider filing a complaint at one or more of the following agencies:
- The FTC at reportfraud.ftc.gov/#/
- Your state’s attorney general, through naag.org
- The FBI’s internet crime complaint center at ic3.gov/Home/ComplaintChoice
- The Better Business Bureau complaint website at bbb.org/consumer-complaints/file-a-complaint/get-started
Working together, we can help make fake check scams less common and less profitable.