How does a fake check scam work? The following stories are scenarios for check fraud:
- You are “accidentally” overpaid for an item you sold online. The buyer asks you to send them the overpayment via wire transfer or popular funds transfer apps like the Cash App.
- You receive a work-from-home offer, a car-wrap advertising offer, or an offer to pose as a secret shopper. You are sent a check for “initial costs” or a “sign-on bonus” and then later notified you need to send a portion back for employment tax, licensing, etc.
- You receive a check with a letter informing you that you are the winner of a lottery or sweepstakes. The enclosed check is supplied to help “pay taxes” on the winnings and you are instructed to send the “tax payment” via wire transfer.
- You receive a request from an online friend or from a family member’s online account asking you to deposit a check they send you. They usually claim they are unable to get to the bank and ask you to send the money via wire transfer or popular funds transfer app.
Regardless of the story, the result is the same and the check involved will be fraudulent. It will be returned unpaid and the full amount of the check will be deducted from your bank account. Unfortunately, you’ve already withdrawn the funds and sent them to the scammer.
Who is responsible for the loss?
You are responsible for any check or money order deposited to your account. If a check or money order you deposited is returned unpaid, you are responsible for the loss.
Why did the bank allow me to withdraw the money?
Federal regulation requires banks to make funds available to customers by a defined number of business days. Checks are often returned unpaid after the bank is required to make the funds available to the customer. It can be weeks before a fraudulent check is identified, reported, and returned to your account unpaid.
How can you avoid being a victim of a check scam? Consider the following:
- If it sounds too good to be true, it probably is.
- Legitimate hiring employers will require standard pre-employment forms, such as a W-4.
- Legitimate hiring employers should not require your online banking credentials for deposit purposes and will not use popular funds transfer apps for payroll purposes.
- Don’t accept personal checks from strangers for items you sell online.
- Never use money from a check to send money via wire transfer or funds transfer app.
If you suspect a check to be fraudulent, discuss your options with your bank. Visit FTC’s website here for more information, including how to report a fraudulent check scam.
