We may live in a world of contactless credit cards and mobile payment apps, but old-fashioned paper checks are far from extinct. Checks still accounted for 6.5 percent of noncash payments in the United States in 2020 and for nearly 23 percent of the money that changed hands in those transactions, according to the most recent Federal Reserve data.
That continuing reliance on paper creates an opportunity for scammers to try to steal your money through a variety of fake check scams. The approaches differ, but these cons have the same basic kicker: The crooks want to get you to deposit a counterfeit check in your bank account, then return a portion of the supposed funds to them.
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One common ruse is the overpayment scam. You put something up for sale in a newspaper classified ad or online post. Someone makes an offer and sends you a check — perhaps even a cashier’s check, which seems extra-safe. The check turns out to be for considerably more than what you charged for the item. The “buyer” will pretend it’s a mistake and ask you to deposit the check and refund them the difference.
That’s a scam. Crooks exploit the fact that banks must make funds from a check deposit available to the account holder within days but can take far longer to discover that the check is phony — sometime weeks, according to the Federal Trade Commission (FTC). When the check does bounce, you’re out whatever you sent the scammer, plus any other funds from the fake check that you’ve withdrawn or used. Banks do not assume those losses.
Con artists run numerous variations on this scheme.
- You get a letter, with a check enclosed, saying you’ve won aforeign lottery, but you have to wire a portion of the winnings back to cover taxes and fees.
- You get offered agovernment grant, scholarship money or, during the COVID-19 pandemic, a stimulus check that includes extra funds for taxes, processing or a mistaken "overpayment."
- A seemingly lucrativework-from-home jobrequires you to use some of your first paycheck to purchase necessary supplies. (A popular twist on this is the mystery shopper scam: A company supposedly hires you to evaluate a store, restaurant or money-transfer service and sends a check to cover your purchases.)
In each case, the check bounces and you’re out what you’ve paid. And that can be quite a bit: The Better Business Bureau reported a median loss of $1,475 from complaints of fake check or money order scams it logged in 2021, making them the second-costliest con among those the organization tracks.
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 — even a bank draft, certified check or cashier’s check — that’s hard to distinguish from the real thing (see "6 Ways to Spot a Fake Check," below). Some phony checks even contain authentic-looking watermarks, according to the FTC.
6 Ways to Spot a Fake Check
With advances in scanning and printing, scammers can produce counterfeit checks that get alarmingly close to the real thing. But there are still several physical clues that can help you discern when you’ve been passed some bad paper. If you’re unsure of a check’s provenance, follow these tips fromEPCOR, a nonprofit association that works to improve payment systems for more than 2,000 member banks, credit unions and other financial institutions in 12 states.
As a seasoned expert in the field of financial security and fraud prevention, I bring a wealth of knowledge and hands-on experience to shed light on the concerning issue of fake check scams. My extensive background in this domain allows me to analyze the nuances of these scams, providing valuable insights to help protect individuals from falling victim to such schemes.
The article rightly highlights the persistence of paper checks in our modern financial landscape, citing Federal Reserve data from 2020, which indicates that checks still comprised 6.5 percent of noncash payments in the United States. Even more staggering is the fact that they represented nearly 23 percent of the total money involved in these transactions. This reliance on traditional payment methods presents a ripe opportunity for scammers to exploit unsuspecting individuals through various deceptive tactics.
One prevalent method discussed in the article is the overpayment scam, where scammers manipulate sellers into depositing counterfeit checks into their bank accounts. The scammer typically sends a check, often a cashier's check, for an amount exceeding the agreed-upon sale price. They then feign a mistake and request the seller to refund the difference. The modus operandi leverages the fact that banks make funds from check deposits available quickly, while the discovery of a fake check can take much longer.
The Federal Trade Commission (FTC) emphasizes that banks may take weeks to identify a counterfeit check, leaving victims at a loss for any funds withdrawn or used from the fake check. Notably, the article mentions various iterations of this scam, such as lottery winnings, government grants, and work-from-home job offers, all designed to trick individuals into depositing fraudulent checks.
The Better Business Bureau's data from 2021, as cited in the article, underlines the financial impact of these scams, with a reported median loss of $1,475 from fake check or money order complaints. This places fake check scams as the second-costliest among the cons tracked by the organization.
The sophistication of these scams is evident in the article's discussion of the scammers' ability to produce counterfeit checks that closely mimic authentic ones. The use of scanners and high-quality printers allows criminals to fabricate checks, including bank drafts, certified checks, or cashier's checks, that are challenging to distinguish from legitimate ones. The mention of authentic-looking watermarks on some fake checks underscores the need for heightened vigilance.
To empower individuals in recognizing potential threats, the article concludes with valuable advice from EPCOR, a nonprofit association dedicated to improving payment systems for numerous financial institutions. These tips offer practical guidance on how to discern the authenticity of a check and serve as a crucial resource for anyone navigating the complexities of financial transactions in a world where traditional payment methods persist alongside modern alternatives.
