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August 20, 2018 | fraud--identity-protection

Fracture the Fraudsters: Steer Clear of These Check Scams


If you’re a U.S. consumer, chances are a financial fraudster has already tried to contact you to try to dupe you out of your money.

The good news is that reports of such fraud in the U.S. have declined slightly since 2016, according to the Federal Trade Commission. The bad news? Lost dollars have escalated 13 times over in that time period, rising from $63 million to $905 million. And fraud can happen to anyone; surprisingly, victims these days are more likely to be millennials than seniors, though the median amount lost by seniors is more than double that of millennials.

One prevalent variety of fraud involves payment with seemingly legitimate checks that turn out to be worthless. Check scams fall under several different categories; prevalent themes these days involve secret shoppers, foreign lotteries, phony employment, social media, check overpayment, pyramid schemes, payday loans, internet auctions, get-rich-quick schemes or sales transactions through sites such as Craigslist, Letgo, 5miles or OfferUp.

In one typical scenario, a letter congratulates you on winning a lottery; to collect, you need only cash the enclosed cashier’s check covering taxes and administration fees then wire the organization the money. The check bounces, the money you sent is stolen and the lottery winnings never materialize.

“Throw away any offer that asks you to pay for a prize or a gift,” advises the FTC. “If it’s free or a gift, you shouldn’t have to pay for it. Free is free."

In another scam, a “customer” agrees to buy something from you but concocts a reason why he must overpay you by check and why you must wire him the difference. You deposit the check and ship the merchandise. Days later you must repay the bad check and you’re divested of both your merchandise and the money you sent. Worst of all, the difficulty in tracking wire transfer recipients means the fraudster is never caught.

Other important facts to understand about check scams:

  • Fraudsters often present phony excuses for why they must write you a check for more than your selling price, why they’re buying on behalf of someone else and/or why they need funds immediately. Don’t fall for sob stories and don’t be pressured to rush into transactions.
  • Never share your credit union username/password so someone can “make a deposit into your account on your behalf.” That opens the door for even further fraud.
  • Even if a fraudulent check initially clears and you receive the cash, you’re still liable for repayment when it bounces — which may not be for days or weeks. Why? In general, financial institutions must legally pay out U.S. Treasury checks, other governmental checks, cashier’s checks, certified checks and teller’s checks one business day after deposit. For other checks, the first $200 must be paid out the day after deposit, with the remainder paid the following business day. However, in moving through financial systems, forgeries can take weeks to identify.
  • Alert your credit union when you’re trying to cash a questionable check, informing it of the source. The check can be held for a validity review.
  • When in doubt about a buyer, request the buyer pay in cash or with a certified cashier’s check.
  • Finally, don’t hesitate to report fraud to the authorities, even if you’re embarrassed. You’re far from alone, and sharing your experience could aid investigations and keep others from falling victim. Contact your credit union, the FTC, the U.S. Postal Inspection Service and your state or local consumer protection agencies.