There are many variations of the counterfeit check scam, as criminals continually use trends and fads to trick victims into cashing phony checks.
As the economy has contracted and education expenses have soared, a new counterfeit check scam is targeting college students and their parents.
"We just received a copy of a letter and a check sent to an Iowa college student in a scam that could have cheated the student out of more than four thousand dollars," said Iowa Attorney General Tom Miller.
The letter claimed to be from "Grant Prospect, Inc.," of Orlando, Florida, and it said the student had been approved for a grant of $50,000. "This Grant is not a loan and you are not expected to pay it back," the letter said, indicating the grant could be used "to pay tuition fees" or other expenses such as a down-payment on a home or medical expenses.
The letter also enclosed a check for $4,420.62 to be cashed and used "to pay for your Federal and State processing fees." The letter said a $40,000 certified check would be delivered to the student one to two days after the required fees had been paid.
"It's a very nasty scam," Miller said. "The student goes to the bank and cashes the check. The bank accepts the check and provides the cash, since it's such a good counterfeit. The student wires the money to the scammer. The counterfeit check bounces in a few days, but the money is already gone -- and the student is liable for it. And the scammer disappears," Miller said.
And, of course, the student gets no grant worth tens of thousands of dollars.
The counterfeit check scam is fairly common. Its purpose is to trick victims into cashing a counterfeit cashier's or corporate check, and wiring thousands of dollars to scammers -- never to be recovered.
Thousands of people have received counterfeit bank cashier's checks, corporate checks and even U.S. Postal money orders with some explanation for them receiving the check and needing to wire the money -- phony sweepstakes schemes, people selling products on-line, even an photographer being 'paid in advance' for doing wedding photography.
The "grant" letter to an Iowa student actually came from Montreal, Canada, according to its envelope, even though the letter itself said it was from Florida. Miller said scores of telemarketing and counterfeit check schemes have migrated to Canada; con-artists located there work their schemes in the U.S. The purported check was made to appear to be issued by Old World Industries, Inc., of Northbrook, IL.
The letter explained that the grants are sponsored by various corporate companies. The sponsors undertake to pay processing fees for winners in return for advertising space.
"There is always a story as to why they are sending you a check -- and asking you to wire money back to them," Miller said. "Wiring money is extremely dangerous. It usually can't be traced, perpetrators can't be caught, and victims are held liable for the money they received and sent away."