A surprise check in the mail might be modern-day fool’s gold. You feel richer at first, but then the check may bounce and you end up scammed out of your own money.
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Fewer people use checks, but check fraud is still a concern. Banks lost $789 million due to check fraud in 2016, according to the most recent data from the American Bankers Association’s Demand Deposit Account Fraud Survey.
4 common check fraud scams
Fraudsters all have the same goal: getting money from you. But their tactics vary. Fraud experts and government websites generally describe variations on these 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. U.S. postal inspector Jeff Fitch says a recent variation on this scam may involve the scammer sending a fake check to cover fees or foreign taxes but then claim they’ve overpaid and ask you to send back the difference.
- 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 receive 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.
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.”
How to avoid trouble
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 can have misspellings too.
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2. Ask yourself why you received the check
If you received a check in the mail that seems odd, figure out who’s giving you money and their motive. Research the person or company to see if the payment makes sense and check any emails you had with them.
“Trust your instincts,” says Sarah Grano, a spokesperson for the American Bankers Association. “If something seems off, talk to your banker.”
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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.
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.
If you haven’t cashed the check yet, don’t.
“Just because you can withdraw the money doesn’t mean the check is good, even if it’s a cashier’s check or money order,” says Grano. “Fakes can take weeks to be discovered.”
If the check bounces, your bank will have the right to withdraw the check amount from your account, even if you already spent the check funds and have a low account balance. That might mean ending up with a negative balance on your bank account.
Your bank may also charge you a deposited item returned fee, which can be around $12, and an overdraft fee for a negative balance, which can be $35.
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.
“The reporting does make a difference,” Fitch says. If scammers are trying to victimize you, they’re likely trying to victimize others.