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Give the Bounce to Counterfeit Check Scams

By Mark Huffman
ConsumerAffairs.com

February 8, 2007     Spanish version

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A new scam is swindling consumers: counterfeit checks that seem legitimate to both bank employees and consumers, but that leave unsuspecting consumers footing the bill.

While the angles used by scam artists may vary, the basics of the counterfeit check scheme remain the same, the Federal Trade Commission advises.

The consumer receives a generous check with an explanation that they've just won an award, a prize, a lottery or some other windfall. The consumer is instructed to deposit the check and wire a portion back to pay fees, taxes, or the like. The consumer deposits the check, the bank credits the funds to the consumer's account, and the consumer wires the money to the sender.

Some time later, both the bank and the consumer learn the check was bogus. Unfortunately, the consumer is out of luck: the money that was wired can't be retrieved and, by law, the consumer is responsible for the deposited check -- even though they didn't know it was fake.

The FTC advises consumers not to rely on funds from checks unless they know and trust the person who gave them the check or, better yet, until the bank confirms that the check has cleared. Other advice includes:

• 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 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. Ask the buyer to write the check for the correct amount. If the buyer refuses to send the correct amount, return the check. Don't send the merchandise.

• As a seller, suggest an alternative way for the buyer to pay, like an escrow service or online payment service. There may be a charge for an escrow service. If the buyer insists on using a particular escrow or online payment service you've never heard of, check it out. Visit its website, and read its terms of agreement and privacy policy. Call the customer service line. If there isn't one — or if you call and can't get answers about the service's reliability — don't use the service. To learn more about escrow services and online payment systems, visit ftc.gov/onlineshopping.

• 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 after the check clears.

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