While consumers may write fewer checks in this era of electronic financial transactions, fake check scams are on the rise, according to a Better Business Bureau report, “Don’t Cash That Check: Better Business Bureau Study Shows How Fake Check Scams Ensnare Consumers.”
The study found the largest group of victims of fake check frauds are in their twenties and the losses may hit hard. Small businesses, lawyers, and banks also suffer losses from these scams.
The report, conducted by the BBB International Investigations Initiative, looks at how fake checks dupe consumers. It digs into the scope of the problem, who is behind it, and the need for law enforcement and consumer education to address the issue. Read the study here.
Scammers are often successful because consumers don’t realize:
- Crediting a bank account does not mean the cashed check is valid.
Federal banking rules require that when someone deposits a check into an account, the bank must make the funds available right away – within a day or two. Even when a check is credited to an account, it does not mean the check is good. A week or so later, if the check bounces, the bank will want the money back. Consumers, not the fraudsters, will be on the hook for the funds.
- Cashier’s checks and postal money orders can be forged.
A cashier’s check is a check guaranteed by a bank, drawn on the bank’s own funds and signed by a cashier. If a person deposits a cashier’s check, the person’s bank must credit the account by the next day. The same holds true for postal money orders. Scammers use cashier’s checks and postal money orders because many people don’t realize they can be forged.
Fake check fraud is a huge problem, with complaints to consumer groups doubling over the last three years.
Fraud employing fake checks is rapidly growing and costing billions of dollars. Fake checks were involved in 7% of all complaints filed with BBB’s Scam Tracker. The number of complaints received by the Federal Trade Commission’s Consumer Sentinel database and the Internet Fraud Complaint Center more than doubled between 2014 and 2017.
The National Consumers League, which also receives complaints from fraud victims at fraud.org, found that fake checks complaints in 2017 were up 12% and was the second most common type of complaint over all, after online order issues.
Nigerian gangs appear to be behind most of this fraud, often using romance fraud victims and other “money mules” to receive money from victims. Many fake checks and money orders are shipped to the U.S. from Nigeria. How do you protect yourself?
Here are tips on what to do if you have deposited a fake check into your account:
- Notify your bank or the bank that appears to have issued the check.
- File a complaint with the following:
- Better Business Bureau
- The Federal Trade Commission (FTC) or call 877-FTC-Help
- The Internet Crime Complaint Center (IC3)
- The U.S. Postal Inspection Service
- Western Union 1-800-448-1492 https://www.westernunion.com/us/en/file-complaint.html
- MoneyGram 1-800-926-9400 http://global.moneygram.com/nl/en/how-to-report-a-problem
- Green Dot 1-866-795-7597
- Victims who are seniors or other vulnerable adults may be able to obtain help through Adult Protective Services, which has offices in every state and many counties. Find a local office at www.elderjustice.gov.