Fake check scams: How to identify, report, and avoid them
January 03, 2024
Life has its moments of good fortune. But if you come across an opportunity that seems too good to be true, practicing caution can save you from a scam.
What looks like a lottery win or a lucrative job offer could be part of a check scam. Learn to separate heydays from fake paydays by familiarizing yourself with check fraud. Here are the telltale signs someone may be trying to rob you with one of these financial crimes.
What are fake check scams?
In a fake check scam, someone tries to get you to deposit a fraudulent check — that you believe is legitimate — into your bank account. They, then ask you to redirect the funds to their account with a seemingly reasonable explanation of why you should. They may tell you that this is an important step in completing a job offer, sweepstakes win, or sale of goods.
Since the check is fake, you can’t deposit their money. You’ve sent them the cash, but you never really had it, which means the money you sent was your own and you can’t get it back.
These scams are successful because many banks make funds available before determining the validity of a check. Criminals who run this fraud work quickly to convince you to move the funds before the bank discovers the check is counterfeit. Once the bank determines the check is fake, the scammer already has the money you unwittingly transferred to them, and you’re left to deal with the financial consequences.
Types of fake check scams
Many people keep a close eye on their money, so fake check scams must be believable to work. Scammers have devised a few common methods of duping their victims. Be on the lookout for the following popular types of check fraud, and remember that this isn’t an exhaustive list.
1. Fake job listings
Fake job listings offer false work-from-home roles or opportunities. These scams can seem quite real because someone interviews you on a messaging platform first, making you believe you must earn the position on merit.
Once you’re “hired,” the scammer will send you a check for work gear, like a computer, or training courses. They’ll ask you to deposit the funds into your bank account and use a service like Zelle to transfer the money to the company. The money you transfer will end up in the scammer’s account but the check won’t clear.
2. App testing gigs
App testing gigs are a fake job scam in which someone “hires” you to try out a finance app. They’ll send you a check to deposit into your account and ask you to test out an app by using it to move the funds they sent. You’re really sending that money to the defrauder, and they were never going to pay you in the first place.
3. Overpayment scams
In an overpayment scam, someone buys an item from you on a platform like Facebook Marketplace or eBay and gives you a check for more than you requested. After you’ve delivered the item and deposited the check, they ask for the difference back.
These scams can be particularly damaging because scammers can pull this fraud off on big-ticket items, like cars. The scammer may claim they accidentally sent you a check for $27,000 when your car cost $25,000. Wanting to do the right thing, you transfer the $2,000 difference to the buyer (a.k.a. the scammer), who already has your car. Your account overdrafts that massive amount when the bank catches the counterfeit check. In the end, you’re out of the whole amount of the check, including the portion you sent back. You also lose the expensive item you sold.
4. Fake sweepstake
If you receive a message saying you’ve won a prize in a letter or email, a check scam may not be far behind. These messages ask you to call a number to collect your prize, and when you do, the scammer explains that there are fees or taxes associated with the prize and they’ll send you a check to cover them.
They’ll then ask you to deposit that check and send the funds to an account that really belongs to the scammer. There’s never a prize in the first place, and you also lose the money you sent.
5. Car wrap scams
Earning money to wrap your car in a logo and market a brand may seem like an easy gig. But scammers claim they’ll pay you thousands to wrap your car when the offer is really an excuse to send you a check “to buy the decal.” The defrauder will then ask you to deposit the check to yourself and send the funds to the decal company, which actually belongs to the scammer.
What happens if you deposit a fake check?
One of the worst parts about fake check scams is that the financial responsibility and damages rest on you.
The federal Expedited Funds Availability Act (EFAA) requires banks to make deposited money available in a few business days. That means it might take a couple of days for banks to determine your check was fraudulent. If that happens, you might bear the following consequences:
You’ll lose the funds deposited via the fake check, even if that check covered the sale of an item you delivered to the buyer.
If the subtraction of the funds from your account results in a negative balance, you may incur overdraft fees.
The bank may put a hold on your account if it believes you’re involved in suspicious activity.
In some states, depositing a fake check is illegal and can result in criminal charges. However, these laws punish people who intend to commit fraud by depositing a bad check, not victims of nefarious schemes. You just have to prove that you didn’t know the check was fake, which could take some time to go over with your bank.
How to spot a fake check and avoid a scam
You can save yourself the financial consequences and emotional stress of fake check scams by learning to spot these frauds.
Familiarizing yourself with common types of check scams is a wise first step. You’re less likely to believe you’ve won a sweepstakes if the source asks you to deposit a check and transfer funds to cover fees when you’re aware of that trick. And in general, it’s a good idea not to accept checks from people you don’t know. It’s rare that you’ll be in a situation where you absolutely have to deposit a check from a stranger.
Another great way to protect yourself is by learning what fake checks look like. Here are several things to look out for:
Missing or suspicious information: Checks should include a verifiable address and a real bank logo and name.
Poor paper quality: Legitimate checks are generally made from high-quality paper.
Smooth edges: Many real checks have perforated edges because they come in a checkbook.
Missing MICR line: At the bottom of legitimate checks, there’s ink-printed data known as a magnetic ink character recognition (MICR) line containing the account number, routing number, and check number.
The routing number is off: Every bank has an identifying routing number, which appears on related checks. You can look up any routing number online, and the one on a real check should align with an actual bank, like Chase or Wells Fargo.
What to do if you're scammed
Don’t blame yourself if you fall victim to fraud. Check scams are common and sometimes hard to detect, especially if you’re excited about the opportunity — so this bad luck could happen to anyone.
Use the following measures to recoup funds and protect others from fraud if it happens to you:
Let your bank know
Contact your bank to let them know you’ve been scammed. In cases where a counterfeit check has overdrafted your account, you may be able to set up a payment plan with the financial institution so that you don’t accrue fees for having a negative balance.
If you discover the scam early on, explain the situation to your bank and ask them to stop the payment you were attempting to transfer to the scammer. It could be too late, but it’s worth it to try and avoid the consequences.
File a report with the Federal Trade Commission (FTC) and the FBI’s Internet Complaint Center (IC3). You may also wish to alert local entities, like your police department and attorney general, in case the scammer tries to do this to more people. Taking this extra step can stop defrauders, protecting other people from the scam.
Get IronVest for added security
Let your warning bells go off if someone you’ve never met offers to send you a check. If you do decide to accept a payment from a stranger, remain hyper-vigilant and make sure the check clears correctly before moving or spending funds. It’s better to be suspicious than fall victim to a scam.
Gain an added layer of protection to your financial dealings by getting IronVest. This tool provides privacy and security solutions, using decentralized biometric technology to ensure that only you control your accounts. Check scammers can run other types of financial frauds, like phishing, and you can rest assured that IronVest’s rock-solid protection will keep your identity safe — even if you cross paths with an experienced scammer.