Consumer Fraud Reporting
Counterfeit Checks
Reporting on the Latest Frauds, Scams, Fake Lotteries, Spams and Hoaxes

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Counterfeit Checks -
What to look for / What to do

If you receive an email or letter in the post / regular mail saying you won a lottery and they send you a check? You just won a foreign lottery? The letter says you did, and all you have to do to collect your winnings is deposit the cashier's check to and wire the money back to cover the taxes and fees. As soon as the courier service gets their fee, youíre guaranteed to get your prize. Or you sold something on Ebay and the buyer paid with a check? Or  you took out a loan from a distant or online bank and they sent you a check? You can just take the check to your bank and cash it right?

WRONG!  And what is worse, if you cash it, in most states in the US, you may be guilty of passing a counterfeit check, money laundering or worse. Clark Howard did a piece on his radio show about a man in California who was arrested for cashing a bogus check. In other words, by merely attempting to cash the check, you could go to federal prison!

The check is no good, even though it appears to be a legitimate cashierís check. The lottery angle or eBay buyer, or a potential tenant for your rental property are just tricks to get you to wire money out of your bank account to someone you donít know.

If you did deposit the check and wire the money, your bank would soon (7 to 21 days later) learn that the check was a fake. And guess who is out of the money?  YOU ARE!  It is your responsibility to repay the bank, because the money you wired canít be retrieved, and youíre responsible for the checks you deposit ó even though you donít know theyíre fake.

ConsumerFraudReporting.org and the Federal Trade Commission both have plenty of examples and have  observed that counterfeit check scams are on the rise. Many fake checks look so real that bank tellers are reporting being fooled. The scammers use high quality printers and scanners to make the checks look real. Some of the checks contain authentic-looking watermarks. These counterfeit checks are printed with the names and addresses of legitimate financial institutions. And even though the bank and account and routing numbers listed on a counterfeit check may be real, the check still can be a fake. These fakes come in many forms, from cashierís checks and money orders to corporate and personal checks. Could you be a victim? Not if you know how to recognize and report them.

Fake Checks Scams

Counterfeit or fake checks are being used in a growing number of fraudulent schemes, including foreign lottery scams (as described above), check overpayment scams, Internet auction scams, and secret shopper scams.

Check overpayment scams

Check overpayment scams target consumers selling cars or other valuable items through classified ads or online auction sites. Unsuspecting sellers get stuck when scammers pass off bogus cashierís checks, corporate checks, or personal checks. Hereís how it happens:

Classified ad or auction posting

A scam artist replies to a classified ad or auction posting, offers to pay for the item with a check, and then comes up with a reason for writing the check for more than the purchase price. The scammer asks the seller to wire back the difference after depositing the check. The seller does it, and later, when the scammerís check bounces, the seller is left liable for the entire amount.

Secret shopper scams

In secret shopper scams, the consumer, hired to be a secret shopper, is asked to evaluate the effectiveness of a money transfer service. The consumer is given a check, told to deposit it in their bank account, and withdraw the amount in cash. Then, the consumer is told to take the cash to the money transfer service specified, and typically, send the transfer to a person in a Canadian city. Then, the consumer is supposed to evaluate their experience ó but no one collects the evaluation. The secret shopper scenario is just a scam to get the consumerís money.

Con artists who use these schemes can easily avoid detection. When funds are sent through wire transfer services, the recipients can pick up the money at other locations within the same country; it is nearly impossible for the sender to identify or locate the recipient.


Warning signs:

New variations of fake check scams constantly pop up, but in each case they give you a realistic-looking check or money order and ask you to send cash in return. Here are some of the common scenarios:

  • In person: Scammers befriend you and ask you to cash a check or money order as a favor.
  • Buyers from classified ads, eBay, or your advertisement: They want to buy something that you are selling and send a check or money order for more than you're asking. You are asked to send the extra to pay for a delivery or some other service.
  • They hire you to work at home and ask you to deposit checks or money orders in your account as part of your job. Sometimes they have you open a new account for the "business", but you're still responsible for any checks that you deposit.
  • They tell you you won a lottery, sweepstakes or inheritance and send you a check or money order as an "advance" on the millions that you're going to receive, to use them to "pay taxes", delivery or other fees.
  • They offer you a foreign business deal and send you a check or money order as an advance on your profits.

Examples of Counterfeit Check Scams

  1. A lottery in Canada sends you a check
  2. North America Millions Jackpot Lottery letter, with "lucky numbers"

You and Your Bank ó Who is Responsible for What?

Under federal law, banks must make funds available to you from U.S. Treasury checks, official bank checks (cashierís checks, certified checks, and tellerís checks), and checks paid by government agencies at the opening of business the day after you deposit the check.

For other checks, banks must similarly make the first $100 available the day after you deposit the check. Remaining funds must be made available on the second day after the deposit if payable by a local bank, and within five days if drawn on distant banks.

However, just because funds are available on a check youíve deposited doesnít mean the check is good.

Itís best not to rely on money from any type of check (cashier, business or personal check, or money order) unless you know and trust the person youíre dealing with or, better yet ó until the bank confirms that the check has cleared.

Forgeries can take weeks to be discovered and untangled. The bottom line is that until the bank confirms that the funds from the check have been deposited into your account, you are responsible for any funds you withdraw against that check.

How to Protect Yourself Against Fake Check Scams

Hereís how to avoid a counterfeit check scam:

  • Throw away any offer that asks you to pay for a prize or a gift. If itís free or a gift, a promotion or a sweepstakes, you shouldnít have to pay anything for it. That's the law! Free is free.
  • Don't enter foreign lotteries. First, it is illegal to play a foreign lottery through the mail, email or the telephone, and most foreign lottery solicitations are phony.
  • Know who youíre dealing with, and never wire money to strangers.
  • If youíre selling something, donít accept a check for more than the selling price, no matter how tempting the offer or how convincing the story. Ask the buyer to write the check for the correct amount. If the buyer refuses to send the correct amount, return the check. Donít send the merchandise.
  • As a seller, you can suggest an alternative way for the buyer to pay, like an escrow service or online payment service. There may be a charge for an escrow service. If the buyer insists on using a particular escrow or online payment service youíve never heard of, check it out. Visit its website, and read its terms of agreement and privacy policy. Call the customer service line. If there isnít one ó or if you call and canít get answers about the serviceís reliability ó donít use the service. To learn more about escrow services and online payment systems, visit this page!
  • 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 thatís not possible, call the bank where the check was purchased, and ask if it is valid. Get the bankís phone number from directory assistance or an Internet site that you know and trust, not from the check or from the person who gave you the check.
  • If the buyer insists that you wire back funds, end the transaction immediately. Legitimate buyers donít pressure you to send money by wire transfer services. In addition, you have little recourse if thereís a problem with a wire transaction.
  • Resist any pressure to ďact now.Ē If the buyerís offer is good now, it should be good after the check clears.

If You Think Youíre a Victim

If you think youíve been targeted by a counterfeit check scam, report it to the following agencies:


Quick Summary: What Can you Do?

You can check the name of the issuing bank on the check with the names of banks that have reported stolen checks and you can call the bank to

  • verify that the account number on the check is legitimate and
  • matches the name on the check and
  • has sufficient funds.

You can go to this website and verify the routing number on the check and get the bank's phone number, then call the bank to verify that the account is real and the check is real.

If you believe you may have fallen victim to this type of scam and wish to report it, please file a complaint with the U.S. government Internet Fraud Complaints Center

Here is a summary of this type of fraud, from the United States Postal Service


For More Information

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. Click here to file a complaint or to get free information on consumer issues, or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

 


Copyright CFR 2005, 2006, 2007, 2008, 2009  - Definition of scam, fraud, etc.Legal disclaimer / corrections / complaints  -  Privacy Policy
Names used by scammers in the examples on this page and others often belong to real people and businesses who often have no knowledge of nor connection to the scammer's use of their name and information.  Sample scam emails and other documents are copies of the scam to help potential victims recognize and avoid it.  You should presume that any names used and presented here in a scam are either fictitious or used without their legitimate owner's permission.
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