Experts estimate that billions of dollars have been lost as the result of fake check scams. Scams involving fake checks come in many different forms and can be very hard to identify as the printing technology used by scammers improves. Better Business Bureau warns against three common check scams and offers advice on the red flags to look out for.
According to statistics from Phonebusters.com, Canada’s anti-fraud call centre, Canadians have already lost over $11 million to mass marketing fraud. Scam artists will often use fake checks as a tactic that has proven effective as consumers report average losses of $3,000 to $4,000 to mass marketing fraud.
“With the radical improvements in printing technology, it is getting to be near impossible to identify a fake check from a real one using only the naked eye because these checks can be printed in full color and even include watermarks,” said Lynda Pasacreta, BBB President and CEO. “To make matters worse, we are often dealing with organized criminals who originate outside of Canada which makes it extremely difficult for law enforcement to track them down and bring them to justice.”
Scams involving fake checks typically require the victim to deposit a check into their bank account then wire money back to the scammers. While the check may initially be deposited into the victim’s bank account—leading to a false sense of security—the fake check will ultimately be discovered within a couple weeks and the bank will take the funds out of the account. The victim of the scam is out whatever money they sent to the scammers and will be responsible for paying the bank back if their account is overdrawn.
Following are three common scams that rely on fake checks and can cost victims tens of thousands of dollars:
Lottery and Government Grant Scam
Victims receive a letter claiming they’ve won a lottery or qualify for a financial assistance grant. Included with the letter is a check for at least a partial amount of the total money they have coming to them. The victim is told that, in order to receive the rest of the money, they are to deposit the check and wire back as much as several thousand dollars. The victim is often told this is to cover taxes or administrative fees. This past spring, BC Lottery Corporation logo/name was used in various mail fraud schemes taking place in Canada, Australia, Singapore, and the United States involving phony letters bearing BCLC's name and logo.
Mystery Shopping Scam
The victim believes that they are going to earn a few hundred dollars by working for a company that provides mystery—or secret—shopping evaluations for businesses. The victim receives a letter in the mail along with evaluation forms, a check and detailed instructions. The victim is to deposit the check into their bank account, and then use the money to purchase items from specified stores and evaluate the customer service the rest of the money is theirs to keep for the work they did. Included in the list of stores to evaluate is Western Union or MoneyGram and the victim is told to wire as much as a couple thousand dollars back to their “employer” and rate their experience with the money wiring service.
Overpayment Scam
The victim is selling an item through a newspaper classified or an online site such as Craigslist. A buyer shows interest and asks to pay for the item by check. When the check arrives the amount is higher than the price of the item. The victim is told that it was a mistake and is sometimes asked to wire the extra back or that the extra cost is for the victim to wire payment to a shipping company that the scammer has chosen—of course the supposed shipping company is actually the scammers.
Fake check scams aren’t limited to the schemes already mentioned and BBB offers the following red flags to look out for:
- You’re told you won a lottery or received a grant you didn’t apply for.
- The name on the check does not match the name of the company or individual you’re supposedly dealing with.
- You’re given instructions to deposit a check into your account and promptly wire part of those funds back to the sender or to another specified company or contact.
- Don’t be fooled by a phone call. Just because you’ve spoken to the scammer over the phone, it doesn’t mean they’re not trying to rip you off.
- To learn more about these types of schemes in depth, visit National Consumers League’s website, fakechecks.org
For more advice you can trust from your BBB on avoiding common scams, visit www.bbb.org