Fake Checks & Payment Scams

While most people consider checks a convenient and safe form of payment, they can be misused by scammers. A “fake check” scam happens in many ways.

In most cases, the scammer sounds very credible. Someone could offer 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.

Don’t fall for their con. Scammers hunt for victims and seek to make them “mules.” They do this by sending a fake check that draws money from an account that does not belong to them (another victim). They may offer this check as payment for service or work. Many times, they will call the victim an “agent,” requesting they transfer money overseas. In exchange, they will typically allow the victim to keep a percentage of money as “payment.” Whatever the scam, the act is illegal and the victims will be defrauded. They may also be subject to legal prosecution.

Tip: Just because funds are available, it doesn’t mean that the check has cleared. If a check doesn’t clear, you will be liable for money drawn against it.

To avoid being victimized, consider the following precautions:

• If you accept payment by check, ask for a check drawn on a local bank, or a bank with a local branch. That way, you can make a personal visit to make sure the check is valid. If that’s not possible, call the bank where the check was purchased, and ask if it is valid.
• Throw away any offer that asks you to pay for a prize or a gift.
• Avoid entering foreign lotteries. It’s illegal to play a foreign lottery through the mail or the telephone, and most foreign lottery solicitations are phony.
• Never wire money to strangers. If possible, meet them before sending money.
• If you’re selling something, don’t accept a check for more than the selling price, no matter how tempting the offer or how convincing the story.
• If the buyer insists that you wire back funds, end the transaction immediately.

Visit the Federal Trade Commission’s website Onguardonline.gov to learn more about fake check scams, online shopping, and internet auctions.