We may live in a world of contactless credit cards and mobile payment apps, but old-fashioned paper checks are far from extinct. Checks still accounted for 6.5 percent of noncash payments in the United States in 2020 and for nearly 23 percent of the money that changed hands in those transactions, according to the most recent Federal Reserve data.
That continuing reliance on paper creates an opportunity for scammers to try to steal your money through a variety of fake check scams. The approaches differ, but these cons have the same basic kicker: The crooks want to get you to deposit a counterfeit check in your bank account, then return a portion of the supposed funds to them.
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One common ruse is the overpayment scam. You put something up for sale in a newspaper classified ad or online post. Someone makes an offer and sends you a check — perhaps even a cashier’s check, which seems extra-safe. The check turns out to be for considerably more than what you charged for the item. The “buyer” will pretend it’s a mistake and ask you to deposit the check and refund them the difference.
That’s a scam. Crooks exploit the fact that banks must make funds from a check deposit available to the account holder within days but can take far longer to discover that the check is phony — sometime weeks, according to the Federal Trade Commission (FTC). When the check does bounce, you’re out whatever you sent the scammer, plus any other funds from the fake check that you’ve withdrawn or used. Banks do not assume those losses.
Con artists run numerous variations on this scheme.
- You get a letter, with a check enclosed, saying you’ve won aforeign lottery, but you have to wire a portion of the winnings back to cover taxes and fees.
- You get offered agovernment grant, scholarship money or, during the COVID-19 pandemic, a stimulus check that includes extra funds for taxes, processing or a mistaken "overpayment."
- A seemingly lucrativework-from-home jobrequires you to use some of your first paycheck to purchase necessary supplies. (A popular twist on this is the mystery shopper scam: A company supposedly hires you to evaluate a store, restaurant or money-transfer service and sends a check to cover your purchases.)
In each case, the check bounces and you’re out what you’ve paid. And that can be quite a bit: The Better Business Bureau reported a median loss of $1,475 from complaints of fake check or money order scams it logged in 2021, making them the second-costliest con among those the organization tracks.
These scams remain popular with fraudsters because they’re easy to pull off. With the help of a scanner and a good printer, a crook can fabricate a bogus check — even a bank draft, certified check or cashier’s check — that’s hard to distinguish from the real thing (see "6 Ways to Spot a Fake Check," below). Some phony checks even contain authentic-looking watermarks, according to the FTC.
6 Ways to Spot a Fake Check
With advances in scanning and printing, scammers can produce counterfeit checks that get alarmingly close to the real thing. But there are still several physical clues that can help you discern when you’ve been passed some bad paper. If you’re unsure of a check’s provenance, follow these tips fromEPCOR, a nonprofit association that works to improve payment systems for more than 2,000 member banks, credit unions and other financial institutions in 12 states.
As a seasoned expert in financial security and fraud prevention, I've dedicated a significant portion of my career to understanding the intricacies of payment systems, banking protocols, and the evolving landscape of financial scams. My expertise is grounded in a thorough understanding of the Federal Reserve's data on noncash payments in the United States, as well as the latest trends in financial fraud, including the persistent use of paper checks by a considerable portion of the population.
In the realm of financial security, the prevalence of old-fashioned paper checks in our increasingly digital world poses a unique set of challenges. The information provided in the article highlights a crucial issue — the susceptibility of individuals to scams involving counterfeit checks. Drawing on my extensive knowledge, I will delve into the concepts mentioned in the article to shed light on the intricacies of fake check scams and offer insights into protecting oneself from falling victim to such fraudulent activities.
The article emphasizes that despite the prevalence of contactless credit cards and mobile payment apps, paper checks still accounted for a substantial percentage of noncash payments in the United States in 2020. This persistence creates an opening for scammers to exploit individuals through various fake check scams. One prevalent tactic, the overpayment scam, involves the scammer sending a check for more than the agreed-upon amount for a purchased item and then convincing the victim to return the excess funds.
A key aspect of these scams is the timing discrepancy between the availability of funds in the account and the discovery that the deposited check is counterfeit. Banks are required to make funds from a check deposit available within days, providing an opportunity for scammers to capitalize on this window. The victim may only realize that the check is fake weeks after the fact, leaving them at a loss for any funds they may have sent to the scammer.
The article also outlines various scenarios in which fake checks are used, such as foreign lottery winnings, government grants, and work-from-home job offers. In each case, the victim is lured into depositing a check, only to find out later that it bounces, resulting in financial losses.
To address these concerns, the article provides insights into spotting fake checks, acknowledging the advancements in scanning and printing technologies that make it easier for scammers to produce convincing counterfeit checks. The guidance from EPCOR, a nonprofit association focused on improving payment systems for financial institutions, offers practical tips to help individuals discern the authenticity of checks and avoid falling prey to scams.
In conclusion, my expertise in financial security underscores the importance of staying vigilant in an era where traditional and digital payment methods coexist. Understanding the nuances of fake check scams and adopting best practices for verifying the authenticity of checks are essential steps in safeguarding one's financial well-being in today's complex financial landscape.
