Even in our increasingly digital age, checks are still a very popular way to transact! People like to use checks to pay rent, or to make large payments like a downpayment on a house, and it can be nice to present a check as a gift to a friend or loved one. However, this method of payment has a high risk of fraud that can make you both a victim and an inadvertent perpetrator of check fraud.
At its core, check fraud is simply getting money illegally by using fake, forged, or bad checks. There are different methods used that also constitute as check fraud.
There can be many ways that criminals can create fake/forged checks. Sometimes, they will get their hands on a real check from someone else, and simply enter in any amount and payee they want and forge the real owner’s signature.
Other times fraudsters can use chemical alteration to rewrite what is written on a check! They can do this by stealing mailed checks from mailboxes, or other ways to intercept legitimate checks.
Forged checks include fraudsters opening an account in someone else’s name to write checks from and stealing account information to print fake checks.
Actions like intentionally writing bad checks can constitute as check fraud. Bad check fraud also includes check kiting, writing a bad check to deposit into another account to create the illusion of a higher balance before the check is discovered to be bad, and check floating, purposely writing a bad check in order to buy a little time before you get the funds in your account.
Check scams take advantage of the law that makes deposited funds available within a certain amount of time, usually a couple of days. Even though the money seems to have been ‘deposited’ in the account, the fake check will be discovered some time later and you will end up paying back the bank.
These scams often start with promises of easy money or someone offering to buy something from you online. This could be a job offer to work from home or make ‘easy money,’ an advance on a sweepstakes, or a proposal to transfer money to a foreign account in exchange for payment.
Once you receive your first ‘paycheck,’ the money will look like it has been ‘deposited’ into your account. From there, the fraudster will claim to have accidentally paid you too much and request you wire back the remainder. After you return some of the money, you will find out that the check was fake, and you have lost money on the transaction. By this time, the fraudster will have disappeared!
Like we’ve mentioned before, requests for payment in the form of a gift card is almost always a telltale sign you are being scammed. If you are ever asked to deposit a check to buy gift cards, you can bet it is fraud.
• Payment for a prize. In the sweepstakes or awards versions of this type of scam, you will be asked to pay for shipping/handling of a prize, or fees/taxes. This is a scam. If you win a legitimate prize, you won’t be asked to send money!
• Checks in surplus amounts. Do not accept or deposit a check that is for more money than required. This is the tactic used to request you wire back the excess funds before the check is recognized as fake.
• ‘Secret shopper’ or ‘personal assistant’ jobs. These fake jobs will include you using funds from a fake check to purchase gift cards for your ‘boss.’ The fraudsters will then use the gift card before disappearing when the check is discovered as a fraudulent check.
There are several physical signs that a check you are using may be counterfeit or forgery.
• Missing or incorrect numbers. These errors can range from the check numbers not displaying correctly in the top right of the check, the check numbers in the top right corner nor matching the MICR number, or a suspiciously low check number (since most fraudulent checks are written from new accounts)
• Incorrect routing number. Sometimes, the routing number won’t match the routing number of the bank that the check purports to come from.
• Discoloration. This could be because a fraudster printed the check on poor quality paper or have altered a real check.
There are a number of other signs that a check may be fraudulent, ranging from missing signatures, ‘void’ or ‘non-negotiable’ on the check, missing name or address, different amounts in words and numerals, and missing logos.
It is important to remember that even though a deposited check may look like it is in the clear, it can take several days or even weeks for the check to be discovered as fake. At that time, the fraudulent funds will be withdrawn from the account.
Only in fall of this year, a TikTok went viral, claiming to have found a ‘glitch’ in Chase ATM’s that allow you to get tons of ‘free’ cash. But as we know, there’s no such thing as free money!
Basically, the video was encouraging ATM users to commit check fraud, by depositing checks into their account in large amounts, and withdrawing the full amount in cash before the check had cleared. Typically, only a partial amount of a deposited check is available for cash withdrawal before the check has cleared, but the TikTok broadcasted the system error, allowing for many individuals to take advantage of this.
Chase has gone on to sue several individuals who exploited this, some to the tune of almost $300,000!
Scams like these highlight the importance of check safety. A missing blank check can cost untold loss to your accounts and checks themselves have a lot of sensitive information that should not be in the hands of fraudsters.
Even though the scam detailed above was advertised as a harmless ‘glitch’ to take advantage of, it was in actuality a serious crime that resulted in legal action being taken! Unknowingly depositing fake checks given by fraudsters can damage your own reputation in the eyes of your financial institution, and you may end up paying the cost financially and legally.
Though there are risks associated with checks, these risks can be mitigated by knowing how to spot scams, and how to use checks properly. Remember to only pay with or accept checks from trusted parties, and if it’s too good to be true, it probably is!
You are about to leave our site. Do you want to continue?
.jpg)
