Fake Checks

Checks are a convenient form of payment, but can be misused by scammers. A problem to be aware of is “fake check” scams.

There are many variations on the fake check scam. It could start with someone offering to buy something you advertised, pay you to do work at home, give you an “advance” on a sweepstakes you’ve supposedly won, or pay the first installment on the millions that you’ll receive for agreeing to have money in a foreign country transferred to your bank account for safekeeping. In many cases, the person may sound quite believable.

Fake check scammers hunt for victims. They scan newspaper and online advertisements for people listing items for sale, and check postings on online job sites from people needing employment. They may even place their own ads with phone numbers or email addresses for people to contact them. They may also call or send emails or faxes to people randomly, knowing that some will take the bait.

Don’t be a “mule”. Scammers hunt for victims and seek to make them “mules”. They do this by sending a fake check that draws money from an account that does not belong to them (another victim). They may offer this check as payment for service or work. Many times, they will call the victim an “agent”, requesting they transfer money overseas. In exchange, they will typically allow the victim to keep a percentage of money as “payment”. Whatever the scam, the act is illegal and the victims will be defrauded. They may also be subject to legal prosecution.

Tip: Just because funds are available, it doesn’t mean that the check has cleared. If a check doesn’t clear, you will be liable for money drawn against it.

The checks are fake but they may look real. Some are phony cashier’s checks, others look like they’re from legitimate business accounts. The companies whose names appear may be real, but someone has made up the checks without their knowledge.

To avoid being a victim, consider the following precautions:

  • Throw away any offer that asks you to pay for a prize or a gift. If it’s free or a gift, you shouldn’t have to pay for it. Free is free.
  • Resist the urge to enter foreign lotteries. It’s illegal to play a foreign lottery through the mail or the telephone, and most foreign lottery solicitations are phony.
  • Know who you’re dealing with, and never wire money to strangers. If possible, meet them before sending money.
  • If you’re selling something, don’t accept a check for more than the selling price, no matter how tempting the offer or how convincing the story.
  • If you accept payment by check, ask for a check drawn on a local bank, or a bank with a local branch. That way, you can make a personal visit to make sure the check is valid. If that’s not possible, call the bank where the check was purchased, and ask if it is valid. Get the bank’s phone number from directory assistance or an Internet site that you know and trust, not from the check or from the person who gave you the check.
  • If the buyer insists that you wire back funds, end the transaction immediately. Legitimate buyers don’t pressure you to send money by wire transfer services. In addition, you have little recourse if there’s a problem with a wire transaction.
  • Resist any pressure to “act now.” If the buyer’s offer is good now, it should be good in a week.

Visit the FTC’s website to learn more about fake check scams.

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