Check Fraud: How to Spot the Fakes

With the rise of online auction Web sites such as eBay, check and money order fraud has become an increasingly popular con. However, you can avoid becoming the victim of check fraud by understanding what to look for and being careful. The key is to pay attention to details and always be cautious when making transactions with people you don't know.

Counterfeit Checks and Money Orders

With the advancement in software technology and printers, fake checks are looking more authentic. Counterfeit checks may take on the following forms:
  • bank check
  • cashiers check
  • money order
  • travelers check.
Willing swindlers go so far as to create checks with the name of reputable financial institutions stamped onto them. For example, con artists have successfully swindled money using American Express check fraud and travelers check fraud, both of which feature forged logos from reliable companies.

Types of Check Fraud

As technology advances, check fraud also evolves. While some con artists print fake checks, others may use any of the following methods to commit different forms of check fraud:
  • altering checks
  • forging endorsements
  • forging signatures
  • kiting checks (writing checks for money that isn't in the checking account)
  • writing bad checks.

People at Risk for Check Fraud Schemes

Sadly, check fraud can trick and victimize people of all ages. Anyone who expects to receive a check from unknown persons could be at risk. However, those who sell goods on the Internet are particularly at risk, as it is an easy way for con artists to find their victims and then easily disappear after swindling them.
 
Some common scenarios in which check, money order or travelers check fraud are used include:
  • foreign business offers: In this type of con, a potential mark receives an e-mail asking him to deposit foreign money in his bank account. After the fake check is deposited, the foreigner requests a sum of money to be wired.

  • Internet scams: Many Internet scams start when a potential mark receives and deposits a forged check for items he sold on the Internet.

  • overpayment schemes: This type of con usually relies on cashier's check fraud. In overpayment schemes, a distant buyer issues a check for a higher amount and asks to be wired the difference. The cashier's check the buyer sends is immediately cleared and everything seems to be OK.

    However, a few weeks later the bank will realize that the cashier's check is fake, forged or otherwise counterfeit. Meanwhile, the buyer and the money that has been sent back are long gone.

  • sudden riches: These scams start when a potential mark receives a letter about inheriting money. A fake check is sent to cover a processing fee. The mark is then instructed to deposit the fake check and wire the processing fee back to receive the falsely promised riches.

Avoiding Check Fraud

With check fraud on the rise, being cautious, especially when dealing with strangers, is key to preventing being a victim of a check fraud scam. Of course, the best protection is to know the individual who is writing you the check. However, if this isn't possible, you might want to try these alternatives:
  • Avoid cashing or dealing with checks numbered below 500.
  • Check and write down the check issuer's ID number.
  • Check that the dollar amount and written dollar amount are identical.
  • Confirm the name, address and phone number of the check issuer are correct.
  • Do not accept second or third party checks.
  • Have your bank verify the check before it is deposited.
Verifying a money order and/or cashier check can be done by calling the bank or company directly. Ask a representative to confirm that your check matches their records.
 
Resources
 
All Business (n.d.). How To Avoid Check Fraud. Retrieved March 15, 2008, from the All Business Web site.
 
Fraud Aid (n.d.).  How To Protect Yourself And Your Family From the Financial Ruin of Nigerian Counterfeit Check Fraud – Overpayment Fraud. Retrieved March 15, 2008, from the Fraud Aid Web site.
 
United States Postal Inspection Service (2008). Fake Checks Consumer Awareness Campaign. Retrieved March 15, 2008, from the USPS Web site.