Even in our digital technology era, many still prefer to pay by check or bankers draft. One reason for this is that people do not trust computer technology and have misconceptions about online banking. This is understandable because of the fact most of these people may be computer illiterate and what is unknown to human mind causes fear or rejection.
In this case however, fear is totally obsolete, for statistics show online banking is safer than checks. To protect yourself from check fraud we will show you some guidelines of necessary precaution you should take before you receive or send a check. Then it is your responsibility to inspect and analyze the check.
Check Scams: A Cheater’s Delight
Checks are broadly used to simplify transactions, which attracts many users. That turns this method into an attractive target for scammers.
The con man gets in contact with you once you receive their check. After you transfer it to the personal bank account, they give you instructions on where to send the money, depending on the scam variation.
Example: If someone sends you $500, and asks for whatever reason, $100 in return, you’ll think you have profited $400. After a few days, the fake check bounces back and the con man gets your $100.
After you send them money, you’ll never hear from them again. You may report the case, but it will be hard to recover your money.
In essence, check fraud is a confidence trick that reminds one of similar schemes — such as the pigeon drop or the advance fee scam. The victim thinks they’ve received money, but it’s a fake document.
Exposing The Scheme: How Check Scams Work
These scams work because counterfeit checks generally look like real checks, even to bank employees themselves. They are often printed with the names and addresses of legitimate financial institutions. They may even be genuine checks written on bank accounts belonging to victims of identity theft.
It can take weeks for a bank to figure out that the check is a fake. When done well, check scams yield high rewards at relatively low risk for the perpetrator. All that is needed is:
A Fake Check
How do these checks work and how are scammers able to trick our bank? These are the types of fake cheques:
When dealing with expert con men, any of the giveaway signs are hard to notice.
The Target
Millions of people use checks each day, which is good news for scammers. They want to be where the money flows to get the best reward.
Anyone that is able to cash-in a check is a potential target, be it a business or an individual.
The Hook
Because it’s a confidence trick, the scammer has to disguise the scheme to prevent suspicions. Mind that the con men may adapt their scheme to any context.
What context? They could disguise it as a freelance application, a lottery fee, an online service, or a product.
It’s not enough to send the victim a check. The excuse must be well laid out and reasonable so that the victim falls for it.
Examples Of Check Scams
Any activity involving checks as a payment method may lead to a scam. What follows are some examples of how con men could commit check fraud.
Fake Buyers
Businesses are the primary targets of check fraud professionals - especially by organized rings of criminals. Here is how this scam may unfold:
Check in Your Mailbox
You receive a check in your mailbox out of the blue, accompanied with a tempting offer. You have been choosen to advertise a well known brand and all you have to do is put up some stickers on your car and drive around. In case you are interested, you already have a check enclosed that you can cash in right away.
Money from the check may actually initially show up in the your bank account. This happens because banks sometimes “lend” the money as they await for a check or payment to clear in the system.
Using a variety of ploys, you are asked to send some of the money to their account, often by wire transfer or a gift card. In our case we might be asked to pay for the “starter kit” and advertising stickers that were included. The check eventually bounces, and we now have already paid the scammers for the “starting kit”.
Overpaid Check
Someone buys the product you sell using a check. But they pay more than the asking price, “accidentally” or invent different excuses the transfered amount is more than the required amount. They request money to rebalance. Their check will bounce nad you will be left without the amount you have “refunded”.
You might even be threatened with a bad review, because you don’t want to return them the overpaid money they have “accidentaly” written to your name.
Prize Fees
You “won the lottery”! They’ve sent you the receipt, and you need to pay your taxes and fees. It’s the law they say.
You pay your fees, and the check is canceled at some point in the later days. At least you felt like a lottery winner for a few days.
Fake Lenders
Watch out for too-good-to-be-true and fake lenders. Institutions have strict conditions, and many people don’t qualify for loans that they want to get. Scammers, however, are more flexible. The hook? “We will give you money, no matter your credit score or history!”
They set high entry fees or make you pay upfront. You sign the contract, and they send you the check. Pay them the fee and watch how they disappear.
Personal Assistant
Someone qualified you to be their virtual assistant. They will send you a check, including your salary plus the “working capital.” Your job is to send the money in certain directions.
Mystery shoppers are a variation of it. The fraudster gives you a check if you test some products and pay for them. Once your bank finds about the fake check, you realize what happened.
Other Variations
A con man can chain multiple schemes to get even more money from you. Once you get the check, the scammer may use any of these as well:
- Phishing: They tell you to use the money to purchase through their store, which is a phishing website. Now, they can steal your identity and use your bank account.
- Advance Fee: “You need to pay to unlock the funds, or the cheque will bounce back after X days.” When they ask for fees, they ensure the payment method you use has no buyer protection.
Recognizing Cheque Scam Attempts
It’s hard to recognize a fake cheque. But it is easier to recognize someone who is trying to defraud you. Following are some signs to help you recognize a fake check scam attempt.
Does the Data Make Sense?
There are many revisions you can do to stay safe. But we use checks so often than these measures can be time-consuming and burdensome. You don’t need to do extensive analysis with every check you receive, just with those senders that you don’t know.
Do a basic data revision and direct your questions about the received check to the issuing bank and try to find out if something is fishy.
Observe the Check Owner’s Behavior
If you are in contact with the one who gave you the check, then put your alertness up a notch. When you get the check, the scammer will give you further instructions. They may ask you if you have done what was required, if you have cashed in the check already or sent the funds further.
You will hear variations of these questions. If you are suspicious, lie by telling you already claimed the cheque. Do they start flooding you with messages?
Once you try to cash-in the check, the scammer usually has a few days before your bank reveals the scam. They will rush you with direct questions impatiently.
Call your Bank
Let the bank employees research and call you back once they find clues. Do not deposit or cash your cheque until they verify it. If it’s fraudulent, tear the document apart and make it unusable.
If you’re impatient, you may as well try to claim it, but don’t use any of the money. Wait a few weeks to see if it bounces back. The fraudster will either make you hurry or give up on you.
Do nothing, and you won’t lose any money other than the amount on the check which was fake anyway.
Unusual Payment Methods
A legit professional will be flexible with the payment. As a buyer, avoid methods with high transaction fees or no money-back guarantee. Gift cards, cash, moneygram, western union and unknown online payment methods or wire transfer are red flags as well.
You can use an escrow service to ensure payment protection as well. With an escrow service included, if a party doesn’t follow the terms, you get your funds back.
What’s The Reach Out Method?
Scams don’t happen too often, but when they do, the effects may be devastating for the victims. They don’t appear randomly: they come from a source.
Scams catch victims off guard with intrusive, unexpected events. It’s always them reaching out to you, never the other way around. They come up as an opportunity you may see as luck but know nothing about it.
Question anybody approaching you for no reason, especially for business.
Signs Of A Bad Check
Following signs may indicate a bad check. A sign alone does not guarantee that a cheque is counterfeit, but the greater the number of signs, the greater the probability that the cheque is bad.
What You Can Do To Prevent Check Fraud
Some steps you can take to help prevent your check being forged or information added after you wrote the cheque:
If you are receiving a cheque you can minimize any risk associated with it with the following guidelines:
People who are cashing checks end up losing funds when the banks realize the checks are false. That’s because people are held responsible for anything they deposit into their accounts.
The Bottom Line
Scammers will always invent new ways to approach victims to deceive them.
The next time you receive an unexpected check, investigate where it comes from. Know the sender, find answers to your questions, and ask your bank for help.
In a scam, the fraudster will try to put pressure on you so that you have less time to think about the situation. No matter how good the opportunity looks, reduce the risks first, take your time and inform yourself.
No tip will guarantee you full protection all of the time. But prevention will make scams more improbable and you can make payments and receive checks with confidence.