Tag Archives: Check Scams

Letter from the CEO: Check Scams

Great news! You just received a letter stating that you won a cash prize- and the check to cover the taxes for the prize is included. Now all you need to do is deposit the check and wire the extra funds back to the sender. When they get the payment, you get the full cash prize.

Sounds too good to be true, right?
That’s because it is.

This is an example of a fake check scam. And, unfortunately, the Federal Trade Commission (FTC) reports that these types of scams are on the rise. If you were to deposit the check and wire the money, you could potentially be out hundreds of dollars–or more. Typically, the money you wired can’t be retrieved, leaving you responsible for reimbursing the funds.

Counterfeit or fake checks are being used in a growing number of schemes. My son was recently targeted in a rather creative way when he answered an online employment ad. He Skyped with someone who said they were an artist and needed an assistant. My son said he researched the person online and he appeared to be legitimate. The “artist” (con artist, maybe?) sent him a cashier’s check for $2,490 to purchase a computer/scanner/etc. and said he’d be in contact. When my son told the “artist” he was going to wait until the check cleared, he was never contacted by him again… and the check bounced two weeks later. If he’d followed through with the scammer’s instructions, he could have been liable for almost $2,500!

Although our staff are always on the lookout for fraudulent checks or unusual activity, they can’t always determine when a check isn’t legitimate. When you deposit a check, we are required by federal law to make the money available long before we can be certain the check is valid. Best advice: if you get a check from an unknown or questionable source, don’t use the funds for at least two weeks.

Here are some other steps the FTC suggests you take to avoid counterfeit check scams:

  • Throw away any offer that asks you to pay for a prize or a gift. If it’s free or a gift, you shouldn’t have to pay for it. Free is free.
  • Resist the urge to enter foreign lotteries. It’s illegal to play a foreign lottery through the mail or the telephone, and most foreign lottery solicitations are phony.
  • Know who you’re dealing with, and never wire money to strangers.
  • If you’re selling something, don’t 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. Don’t 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 you’ve 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 isn’t one — or if you call and can’t get answers about the service’s reliability — don’t use the service.
  • 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 that’s not possible, call the bank where the check was purchased, and ask if it is valid. Get the bank’s 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 don’t pressure you to send money by wire transfer services. In addition, you have little recourse if there’s a problem with a wire transaction.
  • Resist any pressure to “act now.” If the buyer’s offer is good now, it should be good after the check clears.

If you think you or someone you know was the victim of a fake check scam, please consider taking the following steps:

  • Contact your financial institution.
  • Contact your local law enforcement.
  • Contact your state’s attorney general.
  • Contact the Federal Trade Commission to file a complaint.
  • If you or the victim is an older adult or a person with a disability, contact your local adult protective services agency – you may find local resources via the Eldercare Locator or by calling 1-800-677-1116.

Jim Lumpkin, President/CEO, USACU
Jim Lumpkin
President/CEO
USAgencies Credit Union