Common Check Fraud Scams
There are a variety of check fraud scams to have awareness of, including:
- A fraudster mails you a letter with a check saying you’ve won a lottery or sweepstakes you never entered, and they ask you to send some of the money back to cover any noted fees and taxes.
- Someone posing as a government official mails you a fake check you aren’t expecting, claiming it’s a stimulus payment or funds an agency owes you.
- Mystery shopping or other work-from-home scams that claim to hire you. They send a check earmarked for covering startup or office expenses, but you have to give some of the money back. Fake personal assistant jobs are similar, where you’re asked to purchase gift cards on behalf of your employer.
- When selling goods or a service, a fraudster may ask to pay by check. If you agree, the criminal then writes a check for more than they owe, pretending like they did it by accident, then they ask you to pay them the difference.
- If you put checks in a home or postal mailbox to send, fraudsters may use criminal fishing techniques where they attach a bottle to a string, cover the bottle with a sticky substance, “fish” it into the mail slot, and pull out whatever sticks to it – oftentimes checks.
The fake check approach is always popular and unlikely to go away for as long as checks exist. This is because it’s a simple and effective crime to pull off. All a fraudster needs is a decent printer and a scanner to draft a check that can pass as real. Some fraudsters even take it to another level, using watermarks, or even checks using real checking account information they’ve stolen from another target.
Identifying a Fake Check
Fake checks can be hard to spot, even if you know what you’re looking for. Due to advances in technology, producing counterfeit checks has gotten easier and they’re harder to identify. However, there are a few things to look for that can help to identify a fake check. They include:
- Lack of a logo, or a logo that looks faded or tampered with
- Incorrect bank information, such as a fake address or invalid phone number
- Thin paper stock; the thinner the paper weight, the less likely it’s a valid check
- Check numbers that don’t match. Good checks will have the check number in two spots: the MICR, or magnetic ink character recognition, and the upper corner on the right side
The MICR is often key to identifying a bad check. For valid checks, the line will be smooth, without raised or shiny numbering.
How To Avoid Becoming a Victim of Check Fraud
If it looks like a scam, it almost always is one. But that doesn’t mean you need to become a victim. According to the Federal Trade Commission (FTC), the three main ways to avoid becoming a victim of a check fraud scam are:
- Avoid offers asking you to pay for a prize. No legitimate prize or sweepstakes will ask you to pay, so throw away those mailed offers.
- Never take a check that’s for more than an item or service's selling price. These are nearly always fraudulent.
- Do not use money from a check to send payment to someone you don’t know. This includes gift cards, cryptocurrency, or sending money via wire transfer with services like Western Union.
As a general rule, don’t ever accept checks written for more than the price of something you’re selling. If the buyer says it was an accident, force them to void their old check, and to write a new one in the correct amount. Otherwise, encourage them to pay using a reputable peer-to-peer mobile payment app like PayPal or Venmo.
View this resource to learn more about the types of check fraud and how to prevent it.
Reporting Check Fraud
If you fall victim to a check fraud scam, report it to the appropriate authorities, and your bank or credit union. DCU members should call 800.328.8797 immediately to speak with a fraud expert. For legal authorities, report fake checks to the United States Postal Inspection Service. Counterfeit checks should be reported to the Federal Trade Commission.
In the event of check fraud, it’s also possible criminals have done more than steal money from you. Monitor your credit and online accounts to confirm whether your personal information or your identity have been compromised. With some extra vigilance, you have nothing to lose but a little time.
Does the idea of writing and cashing checks have you nervous all of a sudden? DCU makes it easy to go digital and write fewer, if any, checks. The more you pay online using a secure website and internet connection, the less at risk you are for check fraud. DCU even has a mobile app making it easy to bank safely from everywhere.
Learn more about fraud prevention with a range of articles, videos, and other resources available in our Financial Education Center. If you aren’t already banking with DCU, consider applying to become a valued DCU member to enjoy all our not-for-profit credit union has to offer.
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This article is for informational purposes only. It is not intended to serve as legal, financial, investment or tax advice or indicate that a specific DCU product or service is right for you. For specific advice about your unique circumstances, you may wish to consult a financial professional.
