Financial Tips

FAKE CHECK SCAMS ON THE RISE

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on
October 24, 2018

In early September, the Better Business Bureau (BBB) released a report warning about a spike in fake check scams. These scams now reach 500,000 victims each year. 

The largest pool of victims of fake check scams are in their 20s – a segment of the population that is far more familiar with PayPal than with paper checks. This makes them easy victims for the scam.

Aside from ordinary checks, this scam can also be pulled off with cashier’s checks and money orders. Regardless of the medium used, each of these scams will involve a scammer “overpaying” a victim and requesting that a check be cashed with the difference being deposited into a designated account belonging to the scammer.

Here are the most common variations of the scam:

  1. “Buyers” send sellers a check written out for more than the asking price of an object sold on an online marketplace.
  2. Lottery “winners” are rewarded with an inflated prize with instructions to pay back a part of the check to cover taxes or fees.
  3. “Employees” are granted checks for supplies with instructions to wire back a part of it to the “company.”

In each case, the fake check or money order will seem to clear at the bank or credit union. It is only a few days later, when the victim’s payout to the scammer is deposited and the account does not have sufficient funds to cover it, that the scam becomes clear.

Wondering if a check is a fake? Hold it up to this checklist:

  • Is the check’s paper stock weak and flimsy?
  • Check the company’s name and address. Are they spelled correctly?
  • Verify that the check’s identification numbers printed at the top and the bottom match up.
  • If you’re allegedly holding a lottery winning check in your hands, it should be written out by a state lottery commission.
  • Look for the special ink required for the Magnetic Ink Character Recognition (MICR) code at the bottom of the check.
  • The check should have a routing number on it. You can Google the bank to find out if the routing number is genuine.

It’s also important to know which kinds of transactions are likely to be scams. If you come across any of the following, run the other way and don’t look back:  

  • You’re asked to wire money to a company you’re not familiar with.
  • You’re given a check by a “buyer” that is made out for more than the item’s sale price.
  • You’re given a check from a foreign bank you’ve never heard of.
  • You’re asked to pay a fee to claim a “prize.”

Now that you’ve learned how to spot a fake check and which kind of transactions to avoid, those scammers don’t stand a chance!

Your Turn: Have you ever been targeted by a fake check scam? Share your story with us in the comments!10

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