While consumers may write fewer checks in this era of digital wallets and debit cards, fake check scams are on the rise. That’s according to a new, in-depth study by Better Business Bureau.
Fake checks are used in a variety of frauds, from employment scams to prize and sweepstakes fraud. In all cases, victims deposit the check and send money back to scammers.
According to the report, “Don’t Cash That Check: Better Business Bureau Study Shows How Fake Check Scams Bait Consumers,” this type of fraud is a huge problem, with complaints to regulatory agencies and consumer watchdog groups doubling over the last three years. Current BBB Scam Tracker trends in Texas indicate fake check fraud-related complaints will be more than double the amount reported in 2017.
The study also found the fraud affects victims of all ages and income levels, but consumers between 20-29 reported being victimized by the scam more than consumers of any other age range.
How the scam succeeds
Scammers often succeed because consumers don’t realize:
1. Crediting a bank account does not mean the cashed check is valid.
Federal banking rules require that when someone deposits a check into an account, the bank must make the funds available right away — within a day or two. Even when a check is credited to an account, it does not mean the check is good. A week or so later, if the check bounces, the bank will want the money back. Consumers, not the fraudsters, will be on the hook for the funds.
2. Cashier’s checks and postal money orders can be forged. A cashier’s check is a check guaranteed by a bank, drawn on the bank’s own funds and signed by a cashier. If a person deposits a cashier’s check, the person’s bank must credit the account by the next day. The same holds true for postal money orders. Scammers use cashier’s checks and postal money orders because many people don’t realize they can be forged.
The entire study can be found at BBB.org. It includes details on which agencies to contact if you come across this scam and red flags to look out for.
Victims of any type of scam can help others avoid falling prey by reporting what happened on bbb.org/scamtracker.