Check Fraud

Preventing Loss from Stolen Checks

These tips are useful for any business or individual who receives checks from unknown persons.

  • Always ask for identification and carefully examine it (even if the ID is also written on the check). Thieves will commonly write down the identification on the check prior to presenting the check to avoid being asked for ID.
  • Check the Memo line. Thieves will often write something in the memo line to make the transaction appear to be authentic, such as "Payroll."

Does the check appear to be altered? Look for:

  • Smeared or blurred printing
  • Stains or discolorations
  • Bad odor on check
  • Felt-tip pen marks
  • The appearance of writing beneath the ink
  • Strange texture

Does the check appear to be counterfeit? Look for:

  • Misspelled words
  • Missing or incorrect financial institution logos
  • Different font styles
  • Incorrect prefix in telephone number
  • No perforations along top or side
  • Does the transaction make sense? Is the person from out of the area? Why did they come to your place of business?
  • Trust your gut feeling. If you are suspicious, or have a gut feeling that the transaction is not right, notify the contact person within your company for assistance.
  • Verify the check. Provide the financial institution with the account number, check number, amount and maker name. Often the maker name that appears on the check does not match the account holder name and the check may be out of the series of the actual customer.

Fake Check Fraud

Fake check fraud can vary in its forms, but there are basic components: it involves someone paying you for something with a check and then asking you if they can write the check for more than the amount, and can you give them the difference in cash? Because the check is fake, the victim gets no money and loses the money they gave to the person.

There are many ways that fake check fraud can start. Typically you are approached by someone offering to:

  • Buy something you advertised for sale.
  • Pay you to work at home.
  • Give you an "advance" on a sweepstakes you've won.
  • Give you the first installment on the millions you'll receive for agreeing to transfer money in a foreign country to your bank for safekeeping.

The thieves often claim to be in another country and that it is too difficult to pay you directly, so they'll have to have someone in the U.S. who owes them money send you a check.

 

Can the bank tell if the check is fake?

Not always and often not right away. The checks are typically extremely good forgeries and it is easy to be fooled. Some are fake cashier's checks and some are from legitimate business accounts. The company name on the check may be real, but the check is a dummy—made without the company's knowledge.

By federal law, banks must make the funds you deposit available quickly—usually within 1–5 days. Just because you can withdraw the money does not mean the check is good, even if it is a cashier's check. Forgeries can take weeks to be discovered.

If the check turns out to be fake, isn't that the bank's problem??

Consumers are responsible for the checks they deposit. That's because you are in the best position to determine how risky the transaction is—you are the one dealing directly with the person who is arranging for the check to be sent to you. If it bounces, you owe your bank the money you withdrew.

How do these scammers find victims?

They scan newspapers and online advertising for people listing items for sale. They also check postings on online job sites from people seeking employment. They place their own ads with phone numbers or e-mail addresses for people to contact them. And they call or send e-mails to random people, knowing that some will take the bait.

How can I protect myself from fake check fraud??

There is no legitimate reason for someone who is giving you money to ask you to wire money back—that's a clear sign that it's a fraud. If a stranger wants to send you a check, insist on a cashier's check for the EXACT amount, preferably from a local bank or one with a branch in your area.

If you think someone is trying to pull a fake check fraud—don't deposit the check, report the incident. For more info contact the National Consumer League's National Fraud Information Center at 1-800-876-7060.

Information courtesy of the American Bankers Association.