By Jason Alderman
The other day I got one of those annoying emails from a supposed Nigerian prince promising rich rewards for helping to move money out of his country. It’s hard to believe those kinds of scams are still thriving, but they are. In fact, according to a recent survey conducted by the Consumer Federation of America, fraud (including fake checks, bogus sweepstakes and work-at-home schemes) is now among the top 10 consumer complaints received by consumer protection agencies.
Endless variations on fake check swindles are being perpetrated by phone, letter and email, including these gems:
- You’ve won a foreign lottery and are sent a check that’s the first installment of your winnings. To get the rest, you must deposit and cash the check, then wire the money to someone who will pay facilitate the transaction and pay taxes on your behalf.
- Someone responds to your classified ad or online auction posting for a valuable item. They have a logical-sounding reason why you’re receiving a check above the purchase price: For example, they live overseas and asked someone in the U.S. who owes them money send you a check for more than your sales price; then, you’ll keep your share and wire the buyer the difference.
- You’re hired as a secret shopper to help evaluate a money-transfer service. You’re sent a check to deposit, minus your “pay,” and are then asked to wire out the remainder using the service being tested.
- What these scams have in common is that the checks themselves are fraudulent. Thieves count on the fact that your bank generally must make deposited funds available to you within a few days. However, weeks may pass before the bank ultimately discovers the fraud, at which point they bounce the check. You must then repay your bank the money or have your account frozen or closed and be sued – possibly even face criminal charges.
Today’s sophisticated scanners, printers and software programs make it easy to create checks that sometimes even fool authorities. A few warning signs:
- Fake checks are often printed on lighter, slippery paper and lack at least one perforated or rough edge.
- Missing or faded bank logo, suggesting it may have been copied.
- No street address or a P.O. Box only, or an inaccurate ZIP code.
- Check number at the upper right corner doesn’t match the number on the check’s bottom line.
- Usually drawn for less than $5,000 because by law, deposits under that amount must be made available to you within five days. Crooks count on your completing their transaction before the check has actually been cleared by the issuing bank.
- Stains or gaps around signatures, a digitized appearance, or odd pen strokes, suggesting a scanned or forged signature.
- The first nine digits in the check’s bottom line typically identify the routing number of the issuing bank. Having fewer or more than nine digits means it’s fake. Verify correct routing numbers at www.fededirectory.frb.org/reserve.cfm.
Many good resources exist where you can learn more about fake check scams and how to avoid them, including the FBI (www.fbi.gov/scams-safety), the Federal Trade Commission (www.ftc.gov), the Consumer Federation of America (www.consumerfed.org), and the National Consumers League (www.fakechecks.org/index2.html).
To paraphrase P.T. Barnum, there’s a new scam born every minute. Just make sure you’re not one of the poor suckers who falls for it.
Jason Alderman directs Visa’s financial education programs. To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney
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