Watch Out for Fake Check ScamsCheck fraud is a crime that has been around for literally centuries, but recently it’s seen a modern revival. Criminals are now sending fake checks as a part of clever scams that can bilk victims out of hundreds or thousands of dollars. Instead of businesses or banks, these scams mostly target individuals, taking advantage of their trust and the confusing workings of the banking system to steal from them. To find out how fake check scams work, how much they can cost and how you can spot them, keep reading.

What is a fake check scam?

In a fake check scam, the scammer sends you a check and then asks you to send some money back to them or another party, usually through a wire service like Western Union or with prepaid gift cards. When you deposit the check, it seems to work just fine, and your bank account gets credited with the check’s value. Several days or weeks later, though, the bank discovers the check is fake and debits the funds from your account, meaning any money you sent to the scammer came out of your own cash. While that description alone doesn’t sound like a scheme that many people would fall for, fake check fraudsters cloak their scam with a large variety of false pretenses. Maybe they tell you you’ve won a contest with a monetary prize, send you a check and ask you to send a portion of it back to cover taxes and fees, or you sign up for a fake work from home job and your first assignment is to test money wiring services after receiving a “reimbursement check.” No matter how it begins, just remember that nearly all fake check scams involve someone you don’t know well giving you a check and then asking you to send money somewhere.

How do fake check scams work?

You may be wondering how a fake check can seem to put money into your account, only for it to bounce later. Fake check scams exploit a federal banking regulation that requires banks to make deposited funds from U.S. Treasury checks, official bank checks and most governmental checks available to account holders within one business day. However, it takes more time for your bank to communicate with the check writer’s bank and actually exchange the money, which is a process called clearance. A bad check, or a forged check that’s well-made enough to fool examinations from tellers and bank system scans, can take a while to discover, anywhere from a few days to a few weeks. Meanwhile, the transfer methods that the scammers ask their victims to use to send funds back typically take less than 24 hours to complete a transaction, giving the scammers ample time to take the money and run.

The price of fake check scams

Despite how simple they are, fake check scams have a surprisingly high cost for victims. According to the Better Business Bureau’s 2017 report on scams, victims of fake check scams lost a median of $1,488, which is much higher than the overall median scam loss of $228. Additionally, you can lose even more money to bank fees, such as returned check fees that many banks charge if you deposit a check that doesn’t clear, and overdraft fees if the cost of the scam drains your bank account for more money than you have. If you deposit a forged check, your bank may even suspect you of being a scammer yourself and try to charge you with check fraud.

Fortunately, it’s fairly easy to avoid fake check scams once you know how they operate. Also, it’s generally a good practice to not deposit any checks from people you don’t know, even if you don’t intend to send those people money back. If the check bounces, you still may get slapped with a small returned check fee, and even that lets a scammer cause you more trouble than they’re worth. To stay on top of the latest cons and tricks, follow our scams blog.