Fake check scams (often used jointly with digital payments) are still around and still stealing money from trusting consumers. Innocent people continue to put their misplaced trust in shady people, with the painful result of losing hundreds or thousands of dollars to crooks who superficially appear to be honest.
Fake checks are big business for crooks, and their ability to convince victims that they are reliable people or businesses means that everyone should be careful when receiving a check from a stranger. But many people aren’t careful. According to the U.S. government’s Federal Trade Commission “Consumer Sentinel Network Data Book 2021”: “The median loss for all fraud reports in 2021 is $500. Among the top 10 frauds reported, the median individual losses were highest in these categories: Investment Related ($3,000) and Foreign Money Offers and Counterfeit Check Scams ($2,000)…”, while the report also showed that last year there were almost 70,000 reports of fraud resulting in approximately $130 million in losses from payment apps or services.
One very important reason why being cautious is essential
If you authorize a payment to a scammer, then the lost payment may not be reimbursed by your bank, credit union, digital payment service or credit/debit card company. When someone willingly makes the decision to pay someone, when a personal choice is made to give money to a person or company, that is an authorized payment, even if it is to a scammer. A financial services company is not responsible for a payer’s decision or actions and usually is not legally liable for reimbursing their lost money. The company cannot know who fraudsters are and cannot protect or stop a customer from choosing to spend their money on a crooked transaction.
So, how can you avoid getting scammed by a fake check? That is the key question, and here are a few basic tips for avoiding check scams and money loss that can help answer it:
Some of the ways to avoid fake check scams
- Do not trust a check from someone you don’t know. What appears to be a legitimate check from a well-known financial institution could be fake—or it could be a real check but it’s written from an account that has been closed or has almost no money in it. For a cashier’s check, go to a bank or credit union and have it verify the check is valid before depositing it.
- Always wait until a check has been deposited and it has cleared before using the money; do not immediately pay anyone from a check you received, especially from a stranger. Wait until the funds have been received in your account before paying anyone from that check. It may take from several days to more than a week for a check to clear; but move slowly, be cautious, and be patient.
- You’re paid with a check for more than you’re owed and then—for whatever reason—the payer asks you to send some of the money back, and they want the money sent quickly. Asking for money back is a sign that the payment may not be valid and that the payer is attempting to exploit the difference between a slower fake check payment going to you (that may take days for the money to clear) and a faster digital payment coming from you, where the payment might take minutes to complete. Maybe a stranger is buying something from you, or renting a property of yours and paying by check that includes more than the money that is owed. Perhaps you found a new job online and you’re being mailed a check to "cover the expenses of home office equipment” for the position—which could be a warning sign of a job scam, since most companies ship office equipment to their employees. While the payment situations may differ, what is similar about them is the payer asks for some money back via a digital payment provider and often wants it back fast. A check fraudster may even ask that they be sent money first and that the check they’ve given you not be deposited yet, as more money needs to come into the account from another source. Being asked to hold off on depositing a check is another warning signal that you may be at risk for financial trickery, as is an insistence that money be sent quickly.
- Be very cautious about paying someone you don’t know via a digital payment app or service, such as Venmo®, PayPal® or Cash App®, or other payment service. Digital payments are virtually immediate, and there may be no way of recovering money sent to a crook. It is very important to keep in mind that If a consumer willingly authorizes a payment, if it’s their choice to send the money to a scammer, then it’s unlikely they will get the money back. You can report the lost money to the payment services company and request that it reverse the payment. If the app is connected to a credit card or debit card, then you should also report the fraud to your credit card company or other issuer, such as a bank or credit union.
- You may be able to limit the risk of a digital payment service by tying it to your credit card. It is possible to try to limit the risk of using a payment app. You might be able to link your credit card to the app, and then your payments are ultimately paid through the credit card, rather than directly from cash in a checking or savings account. By linking your credit card, you may benefit from the same account purchase protection that the credit card provides. But linking the credit card to the app could incur an additional cost, since some digital payment apps charge a percentage fee on each transaction—such as 3%—when you attach a credit card to your account.
What to do if you think you’re being scammed—or have already lost money to a crook
- If you think someone is trying to defraud you or has already scammed you, collect and report the details (dates and times of contact, emails, phone numbers and phone records, website addresses, text messages, names of contacts or companies that were used), to the U.S. Federal Trade Commission (FTC) at ReportFraud.ftc.gov.
- If you have already lost money to a scammer, the FTC has a series of quick steps to take so you can try and recover your funds.
- Another option for anyone who’s been a victim of an internet crime is to report it to the U.S. Federal Bureau of Investigation‘s (FBI) Internet Crime Complaint Center (IC3).
- If you suspect that someone may have stolen your identity and is passing themselves off as you, then visit IdentityTheft.gov. That website is the U.S. government’s one-stop resource for assisting identity theft victims. The site provides streamlined checklists and sample letters to guide you step by step through the identity recovery process.
Looking for more ways to enhance your online security and payments? There’s a blog for that
Do we have more advice for you? We certainly do. Here are more Delta Community blog and security posts on managing online personal security and finances:
And for more free advice…
There are also free Delta Community Financial Education Center public live, in-person workshops and on-demand webinars on many different money-related (and some cybersecurity) topics. You can visit the Financial Education Center's Events & Seminars page to register for its sessions.