In 2021, nearly 2.8 million consumers filed a fraud report to the Federal Trade Commission – the highest number since 2001. About 25% of those reports resulted in a financial loss, with the average totaling about $500.
There are many forms of financial fraud; however, one of the most common schemes involves fake checks: personal and business checks, cashier’s checks, and money orders. Counterfeit checks can be made to appear as valid and look exactly like real checks. Sometimes, the checks used for fraud are authentic, but were stolen from another account holder with slight alteration.
A financial institution follows certain steps to verify checks and clear funds. However, just because your bank has labeled a check as “cleared” and made the funds available to you doesn’t mean that it’s a valid check. The purpose of the scam is to make the check appear to be valid so that it clears the initial bank protocol and that by the time the bank discovers the check is a fake, the funds have usually been paid to the scammer, making you responsible for the loss.
As scamming methods become more sophisticated, how can you protect yourself?
- Don’t accept unexpected checks. Legitimate companies do not send or email checks without communicating why the funds are being paid to you. If you receive a random check with no information, don’t cash it without contacting the issuing party to verify the validity of the payment.
- Don’t cash checks issued for more than you were expecting. If you receive a check for more than you are expecting, don’t cash it. A common scam is when a someone posing as a buyer issues a check for more than the sales price and asks the seller to wire the overage back to them or to a third party.
- Never agree to pay anyone with a gift card. A twist to the employment scam involves receiving a check to deposit and then being asked to buy a gift card for less than the deposited funds. The scammer will request that you immediately communicate the specifics of the gift card you purchased, including the card and PINs.
- Order checks directly from your bank. Even though ordering checks from your financial institution may be slightly more expensive than a discount provider, fake check printers prey on bargain hunters. Even if you decide to go with a cheaper option for your checks, make sure you choose a well-known option like Walmart or Costco.
If you do find yourself caught in a scam, you have some options:
• If you’ve purchased a gift card for a scammer, contact the company that issued it immediately and let them know that your purchase was part of a scam. If the card hasn’t been used yet, they will usually cancel it and refund your money.
• If you paid a scammer via wire, contact the organization that transferred the funds right away. While it is not guaranteed, they may be able to reverse the transfer upon request.
• If you paid a scammer with a cashier’s check, contact the company that issued the cashier’s check to see if they can cancel it. And if you sent it through the United States Post Office, contact them at 877-876-2455 to see if you can stop the check from being delivered.
• Whether or not you can recover your funds, you should always report fraud to the Federal Trade Commission at reportfraud.ftc.gov.
Strobl is a team of experienced and trusted lawyers that can advise on all legal matters relating to fraud. For more information, visit Strobl online at StroblLaw.com or on LinkedIn.