Half a million Americans fall victim to check fraud every year. As technology becomes more sophisticated, spotting fraud is becoming harder. But do you know the tell-tale signs?
Check fraud can come in many different forms and guises. Read on as we discuss fake check scams and how to avoid them.
How Does It Impact Me?
It is important to know how to avoid fake check scams, as very often you are liable for the cheque you cash. For example, if you cash a cheque for $2000 and spend the money, when it comes back as fraudulent you are held responsible. This means you could have spent the $2000 thinking it was yours, but now be in debt.
Becoming a victim can also open you up to identity theft. This is where people harvest your personal details and act like you. They may take out loans and money in your name.
When this happens, the best tactic is to start a fraud alert on your credit report. Businesses will have to verify your identity before making any decisions about credit done in your name.
One of the most common check fraud scams involves employment. Very often, someone will get a job opportunity often related to mystery shopping tasks. They involve depositing a check in your bank account, withdrawing a large chunk of the money then wiring part of it to someone else.
The person who is hired is told to keep a lot of the money as payment. When the check gets found out to be fraudulent, the bank reverses the deposit. That person is now left with debt amounting to the value of the check.
Another of the major fraud alerts is a call to say you have won a lottery or gained an inheritance. Once the amount has been stated, they will ask for your address and send you a cheque for a large amount. From this, they will ask you to pay tax and fees for the processing.
By the time you realize you have a bounced check, they have pocketed the fees and taxes. If lucky, the frauded person will not have spent the money in advance.
This method mainly applies to people who sell goods and services online. A customer will send a check and deliberately overpay. This will be followed by a request for the extra payment back.
Retailers send the money, then suddenly realize a bounced check is on their hands. The store owner is left out of pocket and the scammer gains the overpaid amount.
One other method is when a cheque comes in the post that is unsolicited. It can often be for very low amounts and may be disguised as a refund or rebate. However, cashing the check can sign you up for a membership or loan that will take money from your account every month.
How to Avoid Fake Check Scams
There are a number of ways you can protect yourself against fake check scams. The first is by thoroughly investigating any cheques that come from unknown sources without prior notice. Avoid cashing any unexpected checks, whatever their amount.
If you are selling goods and services, never send back overpayment for a check. Instead, cancel the order and ask the buyer to pay again. Explain this is for reasons of financial security, and anyone making a genuine mistake should send the right amount.
The method in which people communicate also plays a part. Many people from legitimate companies do not communicate using social media and messenger. Instead, they will contact on business channels and use work emails instead of Gmail and Hotmail accounts.
You can also verify checks by calling the company that sent them. Some fake checks will go as far as having real company names and account numbers. They may also have contact numbers on the check, which you should avoid using.
Instead, do a search for them online. This is often the first place to find out if they are a scam. Others who have fallen for it before will be more than willing to share their stories.
Verifying a Check
Fraudulent checks will often have a number of red flags. A big sign is any typos or poor grammar on the document itself. This shows they have not been proofread before creation, as a financial institution would do.
Cross-reference the name of the person or the company on the check with the one posting. If they don’t match, then make further inquiries before doing anything. It can take ten days for a bank to realize a check is fake, so in that time don’t wire or transfer money, and don’t spend the amount that had been deposited.
You may have already done some research on the company that sent the check, but not the bank. Look to see which bank issued it and do a search or them online. This FDIC bank find tool will let you see if it is a legitimate institution.
Once you have the bank and know they are genuine, call them. They will ask for the check number, date, and amount. Banks should then also be able to tell you if it has been issued by them.
Knowing the Signs
Now you can spot fake check scams, don’t be afraid to do some groundwork before cashing them. Not all checks are fake, and you may genuinely have gained some capital. With a thorough background check, you can rest assured before you spend your money.
Your first stop for financial help and information should be Check Cashing 247. With a packed blog on everything check-related, we can help you get the most from your money. Click here to see our list of the best check-cashing places.