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Fake check scams are causing young consumers to lose big money

Regulators say the average amount lost is close to $2,000

Photo (c) tuan_azizi - Getty Images
Regulators at the Federal Trade Commission (FTC) are warning young consumers to be on the lookout for fake check scams, which appear to be running rampant among the demographic. 

In an update posted this week, regulators stated that fake check scams led the way in terms of individual median losses last year, at nearly $2,000. Consumers in their twenties appear to be the most likely to fall for this kind of scam.

“The FTC’s Sentinel Network database shows that people reported more than 27,000 fake check scams in 2019, with reported losses topping $28 million dollars,” the agency said. “Young people are hit especially hard. Last year, people in their twenties were more than twice as likely as people 30 and older to report losing money on a fake check scam.”

How the scam works

There are several different variations of the fake check scam, but each one involves a victim being contacted by the scammer. The thief usually sends the mark a seemingly real check or deposit with instructions that they send some of the money on to a third party.

Since the money actually appears in the victim’s account, the scam might seem legitimate at first. For honest people, sending the money on might not be too much of an ask -- but there’s a hidden catch. When the consumer’s bank finds out that the check is fake, they will remove the fraudulent funds from their account, meaning that the money that was sent along was fully paid out by the victim.

In a popular variation of the scheme, victims are usually targeted for the money transfer under the guise of a job offer or some other financial opportunity. Younger people may be particularly vulnerable because they often receive these messages through their college or university emails. 

Avoiding the scam

To avoid this scam, the FTC suggests keeping the following information in mind:

  • If someone sends you a check and tells you to send money -- whether by wiring money or buying gift cards -- you can bet it’s a scam.

  • Even if you see the money in your account, the bank can still take it back if the check later bounces. If you don’t know the person who wrote the check, don’t send money. Period.

  • If you’re selling online, never accept a check for more than your asking price.

Consumers who want to report this kind of scam -- or any other type, really -- can file a complaint with the FTC at its website here.

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