Consumer Safety Information

Tips for Recognizing and Avoiding Fake Check Scams

If someone you don’t know wants to pay you by check but wants your personal identifying information or wants you to wire some of the money back, beware! It’s a scam that could cost you thousands of dollars.

There are many variations of the fake check scam. It could start with someone offering to buy something you advertised, pay you to do work at home, give you an “advance” on a sweepstakes you’ve supposedly won, or pay the first installment on the millions that you’ll receive for agreeing to have money in a foreign country transferred to your bank account for safekeeping. Whatever the pitch, the person may sound quite believable.

The check scam just could be a "phishing" expedition. You may be instructed to call their prize representative to confirm you are the winner, and then you are asked for personal identifying info: your drivers license number; social security number; checking account number, etc. It's really just so they can steal your identity and commit fraud in your name.

Fake check scammers hunt for victims. They scan newspaper and online advertisements for people listing items for sale, and check postings on online job sites from people seeking employment. They place their own ads with phone numbers or email addresses for people to contact them. And they call or send emails or faxes to people randomly, knowing that some will take the bait.

They often claim to be in another country. The scammers say it’s too difficult and complicated to send you the money directly from their country, so they’ll arrange for someone in the U.S. to send you a check.

They tell you to wire money to them after you’ve deposited the check. If you’re selling something, they say they’ll pay you by having someone in the U.S. who owes them money send you a check. It will be for more than the sale price; you deposit the check, keep what you’re owed, and wire the rest to them. If it’s part of a work-at-home scheme, they may claim that you’ll be processing checks from their “clients.” You deposit the checks and then wire them the money minus your “pay.” Or they may send you a check for more than your pay “by mistake” and ask you to wire them the excess. In the sweepstakes and foreign money offer variations of the scam, they tell you to wire them money for taxes, customs, bonding, processing, legal fees, or other expenses that must be paid before you can get the rest of the money.

The checks are fake but they look real. In fact, they look so real that even bank tellers may be fooled. Some are phony cashiers checks, others look like they’re from legitimate business accounts. The companies whose names appear may be real, but someone has dummied up the checks without their knowledge.

You don’t have to wait long to use the money, but that doesn’t mean the check is good. Under federal law, banks have to make the funds you deposit available quickly – usually within one to five days, depending on the type of check. But just because you can withdraw the money doesn’t mean the check is good, even if it’s a cashier’s check. It can take weeks for the forgery to be discovered and the check to bounce.

You are responsible for the checks you deposit. That’s because you’re in the best position to determine the risk – you’re the one dealing directly with the person who is arranging for the check to be sent to you. When a check bounces, the bank deducts the amount that was originally credited to your account. If there isn’t enough to cover it, the bank may be able to take money from other accounts you have at that institution, or sue you to recover the funds. In some cases, law enforcement authorities could bring charges against the victims because it may look like they were involved in the scam and knew the check was counterfeit.

There is no legitimate reason for someone who is giving you money to ask you to wire money back. If a stranger wants to pay you for something, insist on a cashiers check for the exact amount, preferably from a local bank or a bank that has a branch in your area.

Don’t deposit it – report it! Report fake check scams to the National Fraud Information Center/Internet Fraud Watch, a service of the nonprofit National Consumers League ("NCL"), at www.fraud.org (Note: by clicking here, you will be leaving the Pacific Trust Bank web site) or (800) 876-7060. That information will be transmitted to the appropriate law enforcement agencies.

Fake Check Scams, Wire Transfers Dominate 2006 Fraud Lists

NCL’s Fraud Center Releases Telemarketing, Internet Scam Trends for 2006

WASHINGTON, D.C.—The National Consumers League (NCL) released its annual lists of the top telemarketing and Internet scams plaguing consumers in 2006, with Fake Check Scams topping the Telemarketing Fraud list and ranking 3rd among Internet-based scams. Fake Check Scams, in which victims receive a realistic-looking phony check and don’t discover it’s no good until after depositing it and wiring money back to the crook, have been on the rise since NCL created a category for the scam in its fraud database in 2003; in 2006, Fake Check Scams ranked #4 and #5 in the Fraud Center’s Internet and Telemarketing scam reports, respectively.

Other trends in 2006 included a dramatic increase in the number of wire transfers involved in scams reported to the Fraud Center. This method of payment outnumbered all others, including credit cards, bank debits, and money orders, in both Telemarketing and Internet Fraud reports.

“Consumers are losing money to Fake Check Scams in frightening numbers, and they’re losing the money permanently to crooks that are operating from foreign countries,” said Susan Grant, Director of NCL’s Fraud Center. “Con artists are growing increasingly creative with their pitches to victims, but the bottom line is the same. Whether you’re being offered a ‘prize,’ a ‘job,’ or overpayment for something you’re selling, if someone is offering to send you a check and have you wire some amount of it back, you’re in for trouble.”

NCL suggests that banks can help to prevent customers from becoming victims by handing them information about fake check scams whenever they deposit sizable checks, training tellers to explain that just because customers may have access to the funds they deposit does not mean that the checks are “good,” and using technology to detect unusual amounts of deposits by customers and contacting them before the checks are sent for processing.

To help consumers avoid scams and rip-offs, NCL’s Fraud Center has added a new feature at www.fraud.org, a calendar with tips of the month. In January, the tips focus on avoiding counterfeit drugs. The September tips are on fake check scams. To see each month’s tips, or to read the full Internet and Telemarketing Fraud Report of 2006, visit www.fraud.org (Note: By clicking here, you will be leaving the Pacific Trust Bank web site).

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