Butte Community Bank | Fake Check Fraud

All "fake check" scams have the same common pattern: Scammers contact victims online or through the mail and send them checks or money orders. They then ask that some portion of the money be wired back to them.

The best thing you can do to protect yourself is learn how to avoid these scams. The old adage still holds true: If someone offers you a deal that sounds too good to be true, it probably is.

Understanding Fake Check Fraud

Most Americans don’t realize they are financially liable when they fall for these scams. There is no legitimate reason anyone would mail you a check or money order and then ask you to wire money in return.

People need to know that checks can take months to clear, even if the money initially looks like it's in your account. The scammers know that, and most consumers don't.

The six most popular scams are:

Foreign Business Offers: Scammers pretend to be businesspeople or government officials and promise millions of dollars. But real companies and government agencies don’t offer legitimate business propositions to people they don’t know.
Love Losses: The scammer poses as a romantic interest online, and promises to come to the U.S. to be with the victim. Soon after, the online friend asks the victim to cash a check or money order to cover “travel expenses.”
Overpayments: Scammers buy merchandise online, and then claim they mailed the wrong amount by mistake. The seller is asked to deposit the “wrong” check anyway, and then return the “excess” amount to the scammer. But the check doesn't clear, and the victim has sent the scammer his own money.
Rental Schemes: Scammers claim to be moving to the area, and put down a rental deposit. Then they tell their landlord they have unexpected expenses, so they ask for some of their deposit back as a favor. They never move in, and the deposit check never clears.
Sudden Riches: The scammer claims the victim has won a foreign lottery or sweepstakes. The notice comes by mail, phone, fax or email. Consumers should know that winners of real cash prizes are notified by certified mail.
Work-at-Home: The scams promise easy money by “processing” checks. The victim deposits the checks and sends the money to the scammer, minus a small fee. Legitimate companies don't do business like this.

Protect Yourself

01. How can I avoid becoming a victim?

Think about it – there is no legitimate reason why anyone would give you a check or money order and ask you to send cash anywhere in return. Be aware that just because you can get the cash quickly – usually in one to five days – doesn't mean the check or money order is good. Crooks take advantage of the fact that counterfeits can take weeks – even months – to discover. By then you've sent the money and have to pay it back to your bank. Only cash a check or money order from a person or business you know or trust.

When making any business deal, do not be rushed: take your time to be certain you trust the person/people you are dealing with. You can be a fraud fighter by telling everyone you know – your family and friends, the people with whom you work or go to school, the people you chat with online, the members of clubs or other groups to which you belong – to learn the warning signs of fake check scams and know how to prevent becoming a victim.

02. What should fraud victims do?

If a victim recently wired money to fraudsters, the victim should report the incident to the security department of the business who handled the wire transfer immediately upon recognizing the problem. If the money has not been retrieved by the fraudster, the victim may be able to recover the money.

Consumers and victims should also save any emails from the fraudster. Law enforcement officials will need the email header information for their investigation.

03. Can victims get their money back?

Unfortunately, there is little chance of victims' getting their money back. This information is provided to help you avoid becoming a victim.

04. Stay Informed

Consumers can learn more at FakeChecks.org
If consumers believe they have been defrauded by a scam, the Postal Inspection Service wants to hear from them. These crimes can be reported by calling 1-800-372-8347.

Frequently Asked Questions

01. What is a fake check scam?

It's a fast-growing fraud that could cost you thousands of dollars. There are many types of fake check scams, but it all starts when someone gives you a realistic-looking check or money order and asks you to send cash somewhere in return. It's phony, and so is the person's story, but that may take weeks to discover. Now your bank wants the money back. Turns out that just because you can get the cash doesn't mean the check or money order is good. If it's not, the crook will be richer and you'll be the loser, because you're responsible for the checks or money orders you deposit or cash. That's how the scam works.

02. How do the scammers find victims?

They scan newspaper and online advertisements looking for people listing items for sale or places to rent. They check postings on online job sites from people seeking employment and place their own ads with phone numbers or email addresses for people to contact them. They meet people through social networking sites, chat rooms, and other places online. They make phone calls and send faxes, emails or letters to people randomly, knowing that some will take the bait.

03. How can I tell if a check or money order is counterfeit?

Know the scenario of a potential scam:

No legitimate transaction includes overpayment or requires a refund.
Typically, phony checks and money orders are so realistic-looking that even bank tellers can be fooled. You can get information from money order and check providers with tips to help tell if their products are real.
The best way to avoid being victim is to be cautious. If it seems too good to be true, it likely is. If the person approaches you and wants to complete the transaction in a hurried manner or is pressuring you to do so, reconsider the transaction altogether.

04. Why do the scammers want cash to be sent using a money transfer service?

Because it's fast – the money is often available to them within minutes. That means the victim may not be able to stop the payment before it's received. Since the money is usually picked up in cash and in person, it may be impossible to find the crook and get it back. Some scammers are also instructing victims to send cash using a delivery service.

If you suspect you've been scammed, contact the money transfer service or delivery service you used immediately – it may be possible to stop the crook from getting the money if it hasn't been picked up yet.

05. Why can't my bank, credit union, or check cashing service tell if the check or money order is good?

When you deposit a check or money order, federal law requires you to have access to the funds within one to five days, but the actual processing takes longer. Banks, credit unions, and check cashing services accept checks and money orders based on your identification. They don't have any information about the source. Because the check or money order goes back to the source, it can take a while for counterfeits to be discovered.

For instance, if a check seems to come from a business account, the business may not learn about it until it appears on the next statement. You're responsible because you're in the best position to determine the risk of accepting the check or money order – you dealt with the person who gave it to you.

06. What if I deposited or cashed the check or money order but haven't sent the cash yet?

Immediately notify your bank or credit union, or a check cashing service if you used one. You will need to return the money or have your account corrected. Explain that you've been scammed and ask not to have any negative action taken against you such as closing your account or reporting you to a checking account abuse database.

If that has already happened, ask if that action can be reversed. File a report with your local police to put on record that you're a scam victim. Report the scam to the National Consumers League, which will pass the information along to law enforcement agencies.

07. What if I have already sent the cash?

If there isn't enough in your account to cover the loss, you could be sued to recover the funds. Try to work out a repayment plan. File a report with your local police to put on record that you're a scam victim. Report the scam to the National Consumers League, which will pass the information along to law enforcement agencies.

08. How much could I lose in a fake check scam?

According to the National Consumers League, victims lose an average of $3,000 to $4,000 – a significant amount for most people. But your losses could be even higher. If you used some of the money to pay bills or for other purposes, you'll have to pay that amount back to your bank or credit union as well.

There may also be bounced check and overdraft charges as a result of the scam. And you could lose more than money – your account could be closed and it could harm you credit rating. Some victims have even resorted to criminal acts to recoup their losses.

09. How can I avoid becoming a victim?

10. What should fraud victims do?

Consumers and victims should also save any emails from the fraudster. Law enforcement officials will need the email header information for their investigation.

11. Can victims get their money back?

Unfortunately, there is little chance of victims' getting their money back. This information is provided to help you avoid becoming a victim.

12. What is the connection between mail fraud and internet fraud?

Any time the U.S. Mail is used to advance a crime, the U.S. Postal Inspection Service gets involved.

Sources

National Consumers League
Alliance for Consumer Fraud Awareness
United States Postal Service
United States Postal Inspection Service