Growing Menace: Fake Check Scams

August 12, 2004
Fake check scams are defrauding thousands of Americans. The National Consumers League reports that fake check scams are now the sixth most common Internet fraud, with consumers losing an average of $5,000 each.

There are many variations on this popular scam. Many start with an e-mail contact, with a stranger proposing to send the mark a check and have him wire money in return. Susan Grant, director of NCL's National Fraud Information Center, says it may start with someone offering to buy something you advertised for sale, pay you to work at home, or give you an advance on a sweepstakes you supposedly won.

Whatever the set-up, the bottom line is if someone you don't know wants to pay you by check but wants you to wire money back, it's a scam.

The crooks often claim to be in other countries and say it's too hard to make payment directly, so they'll have someone in the U.S. who owes them money send the victim a check. The amount of the check is more than the victim is owed, so the victim is instructed to deposit the check and wire the excess back. Or scammers may tell the mark to wire some of the money back as fees to collect their "winnings."

The checks sent to victims are forgeries, but they're so realistic that even bank tellers may be fooled. By the time the checks bounce, the victims have already wired the money to the crooks. Because bank customers are responsible for the checks they deposit, the victims of these scams are left to repay the bank the money they withdrew against the bad check.

American Bankers Association Executive Vice President Edward Yingling explains that federal law requires banks to make the funds you deposit available quickly. But he adds that it's important for consumers to know that just because you can withdraw the money doesn't mean the check is good. If the check turns out to be a forgery, the bank will reclaim the money later.

Some tips on avoiding this and similar scams:

• There's no legitimate reason for someone who is giving you money to ask you to wire money back;
• Just because you can withdraw the money doesn't mean the check is good, even if it's a cashier's check; • If a stranger wants to pay you for something, insist on a cashier's check for the exact amount, preferably from a local bank or one with a branch in your area.

For more details about how fake check scams work and how to avoid them, visit the telemarketing or Internet fraud section of www.fraud.org.

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