GRAND RAPIDS, Mich. (WOOD) — Americans lost more than $63 million to bogus check schemes between 2015 and 2017, and the problem is only getting worse, a new study from the Better Business Bureau concludes.
The BBB says although people are using fewer checks, fake check fraud complaints to government agencies have doubled over the last three years.
The consumer watchdog group says every year, tens of thousands of people fall victim to the pervasive scheme. It involves the scammer sending a bogus check, cashier’s check or money order, which bounces after the victim cashes it and sends back money to the suspect.
Once the check bounces, which can take two weeks or more after it’s deposited, the scammers are gone and the victim is on the hook for paying back the bank.
Millennials fall victim to fake checks more than others, the BBB study finds. Approximately 21 percent of those who filed complaints about fake check fraud were between 20 and 29 years old – more than double the complaint rate among people age 70 or older.
In a country where people are using fewer checks in favor of debit and credit cards, the BBB says scammers prey upon people’s ignorance about how checks work.
INSIDE THE SCHEME
There’s a lag time in finding out the check is a fake because banks make funds available almost immediately, but don’t find out if it’s counterfeit until the check works its way back to the bank that supposedly issued it.
Additionally, cashier’s checks and postal money orders can be forged.
Some common schemes that involve fake checks include:
- Mystery or secret shopper job offers – While there is a real mystery shopping industry, it doesn’t typically send checks in advance to shoppers. Scammers often send checks to victims and ask them to wire back a portion of the money, or use it to purchase gift cards and then send back photos of the numbers on the back of the card, which the scammer then sells.
- Check overpayment scams – A seller will get a check the scammer claims is from a third party who owes the scammer. The suspect tells the seller to wire them the amount above the seller’s asking price.
- Law firm collection scams – The scammer poses as a client and debtor. The scammer tells the law firm a U.S. business owes them money. The law firm reaches out to the fake debtor, who sends a fake check, and the law firm cashes the bogus check, keeping a small amount for its fees before sending the rest to the fake client.
- Car wrap scams – The scammer sends a bogus check to the victim, telling the victim to wire the amount to a company that will put an advertisement wrap on their vehicle, earning them money. However the wrap company is a fake and the wired money ends up back in the hands of the scammer.
- Nanny or caregiver scams – The scammer hires the victim as a nanny, babysitter or caregiver, then gives them a bogus check to buy equipment for job purposes. Victims deposit the check then wire the money to a fake equipment supplier, who turns out to be the scammer.
A scam hallmark is a money transfer request by wire. Once the money is sent and picked up, it’s gone — Victims cannot recover money. The BBB says no legitimate business asks for payment by Western Union, Money Gram or by gift cards.
After the scam plays out, banks cover the cost of the bounced check by taking funds from the victim’s bank accounts or taking action through a collection agency. If the victim cannot pay, the bank’s insurance will absorb the loss.
The victim can also sue the scammer, but it’s often very difficult to find them after the check bounces.
The BBB says Nigerians and other West Africa natives appear to be deeply involved in fake check frauds. The agency says Nigeria is the most populous country in Africa and has an educated residents with few job prospects.
Others are likely involved in the scheme, since someone must create or receive the checks in the U.S. or Canada, mail them to potential victims, and collect the money.
The BBB says “money mules” can help, but they sometimes become the victim, like in the case of “card cracking.” The money mule gives the scammer access to their bank account; the suspect deposits a check, then withdraws most of it before it bounces. The money mule keeps the rest, then is told to claim their debit card was stolen when questioned.
The BBB says the money mule is really a co-conspirator in the scheme, and could face charges. In the least, their credit suffers from the scam.
If you are suspicious of a check, search for the bank’s phone number online and call the bank directly to see if the check is real.
>>USPS: Red flags of a fake money order
The BBB recommends examining any check or money order thoroughly. On checks, look for the following red flags:
- A misspelled company name or address
- Mismatched check numbers at the top and bottom of the check
- Flimsy or suspicious paper the check is printed on
- A routing number that does not match the bank’s routing number
- Lack of special ink for the MICR code (middle set of numbers) at the bottom of the check
- A lottery winnings check that isn’t signed by a lottery commission
IF YOU FALL VICTIM
If you have already deposited a fake check into your account, notify your bank or the bank that appeared to have issued the check.
The BBB also recommends filing a complaint with the following agencies, if applicable: