What is Check Fraud?
Check fraud can take many forms
Often check fraud involves the attempt to pay for products or services using a stolen, altered, or counterfeit check. Some instances of fraud include writing a check to a business or individual with knowledge that there are not enough funds in the account to cover the amount.
These schemes exploit a federal law that requires banks to make money from check deposits available to account holders in just a few days. But it can take weeks to identify a fraudulent check. At that point, it’s too late — your money is gone.
Types of Check Fraud
Check fraud can take many different forms. Often, the scammer will send you a fake or bad check to deposit and ask you to send back some of your own money before the bank fully processes the deposit and realizes the check is fake.
What to watch for
Here are a few common ways check fraud happens.
A scammer may contact you saying you’ve won a lottery or other prize or received an inheritance. They send you a fake cashier’s check for a large amount and ask you to pay taxes and fees on the lottery winnings or inheritance.
Someone may pretend to buy something from you online and then send you a check for more than the asking price or amount requested. The buyer then asks for the overpayment back.
A person contacts you claiming to be organizing mystery shoppers for a company that sells gift cards or money orders. They send you a check to deposit in your personal account, and then transfer some of the money elsewhere — an accomplice to the fraud. This person disappears with your money.
You may receive a check in the mail you weren’t expecting, often for only a few dollars. You may think it’s a rebate on something you bought. But in reality, it may be a fake check scam. By cashing the check, you could be unknowingly signing up for a membership or taking out a loan that will draw on your account every month, through a program that’s difficult to cancel.
What are some signs of check fraud?
If you’re concerned that an offer being made to you is fraudulent or that you’ve been given a fake check, look for these red flags.
Fraudsters often ask their victims to purchase gift cards and then read the PINs to them. Others ask to be sent a money order. Doing either is like sending cash, and it’s almost impossible to get your money back.
A prize isn’t free if you’re being asked to pay for it in any way.
Don’t accept it.
It’s difficult to track down scammers in another country.
Be suspicious of being told you won a contest you never entered.
Why the rush? The scammers want you to send money before your bank bounces the check.
How can I avoid check fraud?
Besides watching out for the red flags of check fraud, you can take some other steps to avoid becoming a victim.
Here are a few best practices.
Protect your business from check fraud.
Follow these steps to limit risk and prevent financial loss.
Contact us to learn more.