Bad check scams Archives - FBI Support Cyber Law Knowledge Base

Fake check scams are the most pervasive fraud in America, hitting virtually every demographic group with some permutation of the same clever con, according to the National Consumer’s League.

“Fake check scams are an equal opportunity fraud,” says John Breyault, director of the National Consumers League Fraud Center. “Scam artists are savvy, networked and know every button to push to get consumers from all walks of life to fall for their schemes.”

There are multiple permutations of the same con. But the basic way it works is this: You get a check for a relatively large amount of money and are asked to refund or pass on a portion of the amount to the sender or a third party. By the time you find out that the check is fake, your money is long gone.

The typical victim loses between $3,000 and $4,000 in the scam, says Susan Grant, director of consumer protection at the Consumer Federation of America. “Once you send money to a crook, it’s almost impossible to get back.”

Tragically, the scam works partly because of common misunderstandings about how banks clear checks. Financial institutions are required by federal law to give you credit for checks deposited in your account within a set number of days. The precise timing depends on whether the check issuer is local, national or international. Most consumers assume that when the bank makes the funds available, it has determined that the check is good. But that’s not the case.

It can take weeks to discover a good forgery. At that point, the bank will reverse the credit it gave you for the fake check and you’re on the hook for any checks you wrote against it. Worse, many banks will consider you the crook, close your account for “suspicious activity” and enter your name into a database that will make it more difficult to open another bank account, says Grant.

Consumer experts have been warning about this growing con for years. And yet, the crooks are so clever and convincing that they are believed to have conned more than 1.3 million people. Here are the five most common ways that they do it, and the tip-offs that help you know it’s a scam.

Mystery shopper: You’re looking for a job and answer an advertisement for mystery shoppers. The company sends you a check supposedly to cover the items you’ll be buying and to “test” Western Union’s services. You get to deduct your pay from the check too.

Tip offs that this is a scam?

1. The check is for more than $1,000 and the company says you can keep a $200 or $300 fee for the job. Real mystery shoppers get paid $10 to $25 per job.

2. They paid in advance. Legitimate mystery shopping jobs pay only after you’ve turned in your review.

3. Review Western Union? If the con artists were to be believed, Western Union would be the most mystery-shopped company in the world. They want you to use Western Union because sending this draft is the same as sending cash. Once it leaves your hands, it’s gone.

Sweepstakes: You have won an international lottery! Congratulations! Here’s a $20,000 check for just a portion of your winnings. To claim the additional hundreds of thousands of Euros or dollars that you’ve won, all you have to do is send a personal check for the taxes due on your winnings.

Tip-offs that this is a scam?

1. You didn’t enter an international lottery. (I swear, you would remember if you did.)

2. Taxes are collected after you receive income, not before.

3. Governments collect taxes, not lotteries.

Account manager: You’ve been hired as the account manager at a major international distributor. You can work at home. Your only responsibility is to handle remittances. You get checks, deposit them into your own account and pass them on, subtracting your fee. Your fee is substantial.

Tip-offs?

1. International corporations have no problem opening their own bank accounts. Why do they need you to use yours? Oh...because they’re not an international corporation and if they used their own accounts, they couldn’t steal your money.

2. Jobs that require very little work for high pay don’t exist unless you’re a corporate Chief Executive Officer. And to get a job as a CEO, you need to know how to golf.

Overpayment: You are selling your car/puppy/chest-of-drawers and have placed an advertisement on the internet. You get contacted from somebody who just loves English Bull Terriers (or whatever you’re selling) and is desperate to pay full price. Just one problem. The buyer is from overseas; hasn’t yet opened a U.S. bank account; and can only pay with a third-party check — maybe even a paycheck. If you take that check and deposit it, you can pay yourself and just give them cash for the overpayment, right?

Tip offs?

1. Opening a bank account with a paycheck is pretty dang easy. It might take a few hours, but the Bull Terriers can wait. If you cash this check, you are the bank and you have your first bad debt. (Congratulations. Maybe you can apply for a government bail-out.)

2. Your Bull Terriers are clearly the cutest in the world, but there are others in the world — even others in your state/city/county. Your buyer is generating a sense of urgency — I’ve got to have one and I’m afraid they’ll all be sold before I get my account opened! — just to scam you. Tell them to let you know when their account is opened, and you’ll put them on the list to have first pick of the next litter if this litter is, indeed, all spoken for by the time their bank account is opened.

Grant: You get an official looking letter saying that you have won a $100,000 grant from the government or some foundation. But to claim the grant money, you need to send a “processing fee.”

Tip-offs?

1. You didn’t apply for a grant.

2. You are not a scientist.

3. Government agencies and foundations that provide grants send you money. They don’t ask you to send them money (unless they’re soliciting donations…and that’s not the kind of letter you got).

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If someone you don’t know wants to pay you by check but wants you to wire some of the money back, beware! It’s a scam that could cost you thousands of dollars.

Stay safe. Be Informed.

There are many variations of the fake check scam. It could start with someone offering to buy something you advertised, pay you to do work at home, give you an “advance” on a sweepstakes you’ve supposedly won, or pay the first installment on the millions that you’ll receive for agreeing to have money in a foreign country transferred to your bank account for safekeeping. Whatever the pitch, the person may sound quite believable.
Fake check scammers hunt for victims.

They scan newspaper and online advertisements for people listing items for sale, and check postings on online job sites from people seeking employment. They place their own ads with phone numbers or email addresses for people to contact them. They buy “sucker lists” on the black market which has sensitive information of people who have been previously scammed. And they call or send emails or faxes to people randomly, knowing that some will take the bait.
They often claim to be in another country. The scammers say it’s too difficult and complicated to send you the money directly from their country, so they’ll arrange for someone in the U.S. to send you a check.
They tell you to wire money to them after you’ve deposited the check. If you’re selling something, they say they’ll pay you by having someone in the U.S. who owes them money send you a check. It will be for more than the sale price; you deposit the check, keep what you’re owed, and wire the rest to them. If it’s part of a work-at-home scheme, they may claim that you’ll be processing checks from their “clients.” You deposit the checks and then wire them the money minus your “pay.” Or they may send you a check for more than your pay “by mistake” and ask you to wire them the excess. In the sweepstakes and foreign money offer variations of the scam, they tell you to wire them money for taxes, customs, bonding, processing, legal fees, or other expenses that must be paid before you can get the rest of the money.
The checks are fake but they look real. In fact, they look so real that even bank tellers may be fooled. Some are phony cashiers checks, others look like they’re from legitimate business accounts. The companies whose names appear may be real, but someone has dummied up the checks without their knowledge.
You don’t have to wait long to use the money, but that doesn’t mean the check is good.Under federal law, banks have to make the funds you deposit available quickly–usually within one to five days, depending on the type of check. But just because you can withdraw the money doesn’t mean the check is good, even if it’s a cashier’s check. It can take weeks for the forgery to be discovered and the check to bounce.
You are responsible for the checks you deposit.

That’s because you’re in the best position to determine the risk–you’re the one dealing directly with the person who is arranging for the check to be sent to you. When a check bounces, the bank deducts the amount that was originally credited to your account. If there isn’t enough to cover it, the bank may be able to take money from other accounts you have at that institution, or sue you to recover the funds. In some cases, law enforcement authorities could bring charges against the victims because it may look like they were involved in the scam and knew the check was counterfeit.
There is no legitimate reason for someone who is giving you money to ask you to wire money back.

If a stranger wants to pay you for something, insist on a cashiers check for the exact amount, preferably from a local bank or a bank that has a branch in your area.