There's been explosive growth in counterfeit personal, business and cashier's checks and money orders in the last few years. This is due in part to the growth of online transactions amongst strangers. Consumers and businesses are losing significant sums in scams because they deposited a check from a stranger, withdrew the funds and then sent money or merchandise before their bank discovered the check was fraudulent.
In these cases, the depositor will most likely be held responsible for the full amount. Why? By depositing and withdrawing the money, the consumer is taking responsibility for the funds. Often the withdrawal cannot be canceled or reversed.
Here are some key reminders:
1. Let your bank know first.
It’s safest not to accept checks from strangers. If you do, tell a bank associate about the circumstances surrounding the check.
It can take a couple of weeks, or longer, before the bank discovers a deposited check is bad. If the other party bothers you about waiting, you are strongly encouraged to tear up their check and stop all communications.
Protect yourself by not using the deposited funds or sending items until you have
confirmation the funds are available to use.
2. Walk away from any deal if they ask you to return part of the payment.
Let’s say you sell a $1,200 item online and you’re sent $4,998. The buyer instructs you to deposit the money and send the excess amount to another account. Likely, the check will be returned as counterfeit and you may need to reimburse your bank for $4,998.
3. Know the red flags of check scams.
Identifying a counterfeit check can be difficult for a consumer, business owner, and even a bank teller. Here are some red flags of check fraud:
- The reasons for receiving a check are suspicious (for instance, you won a lottery you never entered and were directed to return a portion of your winnings back to a designated account).
- You're asked to send money outside of the United States.
- You're pressed to send their money right away.
- You're warned to keep things quiet and to not discuss the deal with a bank employee or anyone else.
4. Take additional precautions to make sure a check is good.
Consider insisting on being paid with a money order or a cashier’s check drawn on a local bank or a bank with a local branch. That way you can take the check to that bank’s branch to ensure its valid.
Don’t depend on a phone number printed on a check or money order. If the check is fake, the criminals may answer and tell you the check is good.
5. Immediately report if you think you're a victim of a check fraud.
Contact your bank as well as the local law enforcement.
Shannon is a Vice President at Heartland Bank and serves as the Compliance Officer. She has been an associate at Heartland Bank since 2008.
