Receiving a check might make you feel a little richer — but before you cash it, you might want to make sure it’s legitimate.
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Fewer people are using checks, but check fraud still happens. Banks lost $615 million due to check fraud in 2014, according to the most recent data from the American Bankers Association’s Demand Deposit Account Fraud Survey.
Spotting check fraud
Check scammers all have the same goal: taking your money. But their tactics vary. Fraud experts and government websites generally describe variations on these check scams:
- Foreign lottery scam: You’re told you won a foreign lottery or received an inheritance from a relative you’ve never heard of. You might get a check — that later bounces — and be asked to pay fees or foreign taxes in exchange.
- Craigslist or overpayment scam: You sell something on Craigslist or an online auction site, and the buyer sends you a check for a greater amount than you charged. They ask you to wire the difference back, and the check you received eventually bounces.
- Mystery shopper scam: Mystery, or secret, shopping is a legitimate research job involving visits to brick-and-mortar or online stores. But if you’re being solicited for this work or get payment in advance, it could be a scam.
- Work-at-home scam: You’re hired by a foreign or out-of-state company to sell or ship products. You’re asked to pay for certifications or supplies and don’t receive reimbursement.
Postal inspectors have identified mystery-shopping and work-at-home scams as two main types of fraud recently, says Jeff Fitch, an inspector with the U.S. Postal Inspection Service.
Following these steps can help you avoid being a victim of check fraud:
1. Inspect the check
Some features of a check can suggest that it’s not legitimate, including:
- An unusual check amount: The check shouldn’t be written for more money than you expect. Make sure the figure is exact if you’re accepting a check for a Craigslist item or other transaction.
- Personal details don’t match: Confirm that the payee’s name and business or personal address are real and match what you know about the person paying you. Look any businesses up on the Better Business Bureau website and perform a general search online.
- Missing items or other red flags: The check might be missing a signature, a bank address or logo, or security features such as watermarks or padlock icons. Fake checks might have misspellings or odd abbreviations, too.
“Following a series of tips that revolve around identifying whether a check is fake or not [gives] a false sense of security,” says Robert Siciliano, the CEO of IDTheftSecurity.com.
To protect yourself and your checking account, Siciliano says, think about the circumstances surrounding the check.
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2. Ask yourself why you received the check
If you get a strange or suspicious check, figure out who’s giving you money and the motive. Research the person or company, review any emails you’ve exchanged and trust your instincts.
“Because of the sophisticated technology that scammers use to create counterfeit checks, the best way for a customer to protect themselves is to really understand the circumstances that the check is given to them,” says Doug Johnson, senior vice president of payments and cybersecurity policy for the American Bankers Association.
3. Don’t use the money
If you haven’t cashed the check yet, don’t. Contact your bank first and discuss your concerns. If you have cashed it, don’t spend that money.
“Consumers are often not familiar with the check clearing process. They see the funds available in their account and they assume it’s a good check,” says John Breyault, vice president of public policy, telecommunications and fraud at the National Consumers League.
Your bank must make money from a cashed check available to you within a certain period. For example, funds from a government or cashier’s check must be cleared one business day after you deposit the check. At that point, your bank might not yet have identified a check as a fake.
Johnson recommends waiting five business days before using money from a suspicious check. During that time, the check could bounce and your bank will have the right to withdraw the amount from your account, even if you already spent the money and have a low account balance.
You could be left with a negative balance and owe that balance, Breyault says.
Your bank may charge you a deposited item returned fee, which can be around $12, and an overdraft fee for a negative balance, which can be $35. But the bank generally wouldn’t accuse you of fraud if you didn’t know about it. “In the vast majority of cases,” Johnson says, “the bank will view the customer as a victim.”
4. Alert authorities to fraud
If you think you’re being scammed:
- Notify your bank and local law enforcement of the incident
- Report the fraud on the Federal Trade Commission’s website
- If the check was mailed, inform the U.S. Postal Inspection Service online or by phone at (800) 275-8777
- If the scammer contacted you online, file a complaint at the FBI’s Internet Crime Complaint Center
Scams “are only limited by the imagination of the fraudster,” Fitch says. He recommends keeping in mind the maxim: “If it sounds too good to be true, it probably is.”