The investigative study– “Don’t Cash That Check: Better Business Bureau Study Shows How Fake Check Scams Bait Consumers” — looks at how fake checks dupe consumers. It digs into the scope of the problem, who is behind it, and the need for law enforcement and consumer education to address the issue. Scammers often succeed because consumers don’t realize:
Crediting a bank account does not mean the cashed check is valid.
Federal banking rules require that when someone deposits a check into an account, the bank must make the funds available right away – within a day or two. Even when a check is credited to an account, it does not mean the check is good. A week or so later, if the check bounces, the bank will want the money back, and consumers, not the fraudsters, will be on the hook for the funds.
Cashier’s checks and postal money orders can be forged. A cashier’s check is a check guaranteed by a bank, drawn on the bank’s own funds and signed by a cashier. If a person deposits a cashier’s check, the person’s bank must credit the account by the next day. The same holds true for postal money orders. Scammers use cashier’s checks and postal money orders because many people don’t realize they can be forged.
“Millennials especially need to understand fake check scams in order to protect themselves,” said Steve Bernas, president and CEO of BBB serving Chicago and Northern Illinois. “Fake check scammers rely on misunderstandings about checking in order to trap their victims. Consumers should remember that by law, banks credit consumer accounts before verifying that checks are valid, which means funds from fake checks can and will show up in your account but they won’t stay there for long.”
“My office receives hundreds of complaints about fake check scams,” said Illinois Attorney General Lisa Madigan. “It’s critical that people know never to cash the check because unfortunately, if they do, they are on the hook to repay the money once a bank determines the check is counterfeit.”
Fraud employing fake checks is rapidly growing and costing billions of dollars. The number of complaints received by the Federal Trade Commission’s Consumer Sentinel database and the Internet Fraud Complaint Center more than doubled between 2014 and 2017.
Based on complaint data trends, the study suggests that there may be over 500,00 victims of counterfeit checks in 2017.
The study found the fraud affects victims of all ages and income levels, but consumers between 20-29 reported being victimized by the scam more than consumers of any other age range.
A Chicago victim was contacted from someone posing to be from a legitimate company offering her a work-from-home opportunity. She had heard great things about the company so she was excited. After responding, she was told she would need to buy office supplies, a laptop and a printer. The supposed recruiter emailed several checks to her so she could buy the items from the “company’s vendor.” She printed the checks and deposited them into her bank account. She said she waited until the bank told her the checks had cleared and then sent several payments totaling $2,000 through Western Union to the “vendor” in Huntington, West Virginia. After her bank froze her account, she reached out to the company for which she believed she had been hired but never heard back.
The National Consumers League, which also receives complaints from fraud victims at fraud.org, found that fake checks complaints in 2017 were up 12% and was the second most common type of complaint over all, after online order issues.
Nigerian gangs appear to be behind most of this fraud, often using romance fraud victims and other “money mules” to funnel money through victims. Many fake checks and money orders are shipped to the U.S. from Nigeria.
The report recommends:
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Organizations such as BBB and regulatory agencies do more to provide fake check fraud prevention education.
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With wide-scale use of money mules and others to assist in frauds, it would be useful for law enforcement agencies to work collaboratively to both identify these individuals and to take action to ensure that they end these activities.
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Investigative agencies may need more resources to effectively prosecute fake checks and other widespread frauds.
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Banks and financial institutions might consider more collective efforts to educate their customers about fake check frauds.
What to do if you have deposited a fake check into your account:
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Notify your bank or the bank that appears to have issued the check.
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File a complaint:
o Federal Trade Commission (FTC), or call 877-FTC-Help
o Internet Crime Complaint Center, or IC3
o U.S. Postal Inspection Service
o Western Union, 1-800-448-1492 https://www.westernunion.com/us/en/file-complaint.html
o MoneyGram, 1-800-926-9400http://global.moneygram.com/nl/en/how-to-report-a-problem
o Green Dot, 1-866-795-7597
o Canadian Anti Fraud Centre, toll-free from US at 1-888-495-8501
Victims who are seniors or other vulnerable adults may be able to obtain help through Adult Protective Services, which has offices in every state and many counties. Find a local office at www.elderjustice.gov.
Read these tips to avoid becoming a scam victim.
ABOUT BBB:
For more than 100 years, the Better Business Bureau has been helping people find businesses, brands and charities they can trust. In 2017, people turned to BBB more than 160 million times for BBB Business Profiles on more than 5.2 million businesses and Charity Reports on 11,000 charities, all available for free at bbb.org. There are local, independent BBBs across the United States, Canada and Mexico, including BBB Serving Chicago and Northern Illinois which was founded in 1926 and serves counties from Northwest Illinois across the State to Kankakee and all the areas in between.