Fake Check Scams on the Rise

In early September, the Better Business Bureau (BBB) released a report warning about a spike in fake check scams across the country. While these scams are not new, their occurrence rate has doubled over the last three years and is up 12% from 2017. 

The BBB further announced that billions of dollars in fake checks circulate each year, and that the number of victims this scam traps annually is close to 500,000. The amount of money lost from these scams is just as staggering: The FTC reported losses of approximately $40 million from fake check scams in just one year. 

Perhaps the most alarming aspect of this scam is the fact that the largest pool of its victims falls between the ages of 20 and 29 – a segment of the population that is far more familiar with electronic payment methods, like PayPal and Venmo, than with a simple paper check. This makes them easy victims for the scam.

Aside from ordinary paper checks, this scam can also be pulled off with cashier’s checks and money orders. Regardless of the medium, each of these scams involves a scammer “overpaying” a victim and requesting the check be cashed with the difference being deposited into a designated account belonging to the scammer.

Here are the most common variations of the fake check scam:

  • “Buyers” send sellers a check written out for more than the asking price of an object sold on an online marketplace, such as Craigslist.

  • Lottery “winners” are rewarded with an inflated prize and given instructions to pay back a part of the check to cover taxes or fees.

  • “Employees” are granted checks for supplies, with instructions to wire back a part of it to the “company.”

In each case, the fake check or money order seems to clear in the financial institution. The scam becomes clear a few days later when the victim’s payout to the scammer is deposited and the account does not have sufficient funds to cover it.

Wondering if a check is a fake? Hold it up to this checklist:

  • Is the check’s paper stock weak and flimsy?

  • Check the company’s name and address. Are they spelled correctly?

  • Every check has an identification number printed toward its top and again at the bottom. Verify that these numbers match.

  • If you’re allegedly holding a lottery-winning check in your hands, the check should be written out from a state lottery commission. If it’s made out by a random company, it’s bogus.

  • Look for the special ink required for the Magnetic Ink Character Recognition (MICR) code that’s at the bottom of the check.

  • The check should have a routing number from its bank. You can Google the bank to find out if the routing number is genuine.

Aside from knowing how to recognize a fake check, it’s important to know which kinds of transactions are likely to be scams. Contact the authorities or your financial institution if you come across any of the following:

  • You’re asked to wire money to a company you’re not familiar with.

  • You’re given a check by a “buyer” that is made out for more than the item’s sale price.

  • You’re given a check from a foreign bank you’ve never heard of.

  • You’re asked to pay a fee to claim a “prize.”

Don’t hesitate to contact DoverPhila Federal Credit Union at 330-364-8874 if you have questions regarding a suspicious check, a questionable transaction, or general fraud. It is better to be safe than sorry.