Counterfeit check scams are sweeping the country and the number of incidents reported by law enforcement and the Better Business Bureaus have increased sharply in recent weeks. According to the National Fraud Information Center, fake check scams ranked fourth on the 2005 list of top ten Internet scams and fifth for telemarketing scams for the same year.
The most common type of scheme involves a counterfeit cashier’s check. A cashier’s check - - a check drawn by a financial institution on its own funds - - has traditionally been seen as a trusted form of payment. Unfortunately, the advent of high quality printers and scanners is making it easier for criminals to counterfeit these checks. As a result, what may appear to be an official check drawn on a legitimate financial institution may not be worth the paper it is printed on.
A problem can occur when a consumer deposits the counterfeit check in a bank account and, a few days later, asks the financial institution if the money is “available.” A consumer should still be very careful about withdrawing money when told the funds are “available.” The better course is to wait until the financial institution can confirm the funds have been “finally collected.”
Many customers may not understand the definition of
funds availability. When funds are available it means that the financial institution is required by law to allow its customers to withdraw the funds but the customer is still responsible should the funds not be collectible. A good check means that the bank has finally collected the money. There is no predictable amount of time, particularly with out-of-state or out-of-country checks, that this will take.
In most cases, victims report that they sent merchandise or wired money to the check issuer only to find that the deposited check was uncollectible. For example, a Massachusetts consumer recently reported receiving a letter informing her that she had won $65,000 from the Royal Pacific Lottery and explaining that she would need to pay a clearance fee required by federal and international law. A few days later, she received a bank check for $2,880 and a note instructing her how to contact one of their agents. She did and was told to wire $2,700 to a lottery agent in Canada. When she failed to do this, she received another telephone call from the agent who told her if she had any questions about the legitimacy of the bank check she should call the bank’s telephone number, which appeared on the check. Fortunately, this consumer did not take any further action.
Many of the inquiries received by the Better Business Bureau involve this type of scam - - where fees are required to collect international lottery winnings.
Another recent report involves a woman that received a letter from a Canada-based company called Secret Shoppers offering her a work at home opportunity. She was told that she had been selected to be the company’s representative (in that area) and that her first job was to check on the effectiveness of a wire service located in a local chain store. She was given a cashier’s check for $2,830, told to wire $2,630 to a man in Canada, and note the quality of the stores service. For this she could keep $200 as her training pay. The catch was she needed to do this within 48 hours after receiving the letter, which did not give her bank time to authenticate the check. She followed the instructions and lost $2,630.
Here are some tips to those who receive checks from individuals or businesses that they do not know:
1) Ask yourself if there is anything suspicious about the transaction. For example, have you been told you have won a prize and need to act quickly, or need to keep your winnings quiet while your claim is being processed?
2) Independently verify that the check is drawn on a legitimate financial institution and represents an actual account. Do not rely on the telephone number listed on the check. Use directory assistance to get the telephone number of the financial institution and call them to verify the check.
3) Do not send any merchandise or rely on the money until the funds have been finally collected by your financial institution. Money made available is not good enough.
4) If you have any questions about whether a transaction is legitimate, talk to your banker or credit union representative. 5) If you are a seller who lists items for sale on the Internet, you should consider services offered by online payment systems and escrow companies. In doing so, you may avoid the risks inherent in accepting an alleged certified check for payment from a far-away buyer.
Consumers or businesses who have been victimized by a phony check drawn on a federally insured financial institution should contact the
Federal Deposit Insurance Corporation at
(877) 275-3342. If the check is drawn on a foreign bank, contact the United States Secret Service, the federal agency fighting this type of international fraud, at
(202) 406-5572. Complaints can be sent to the US Secret Service by logging on to their website at
www.secretservice.gov.
Consumers can also seek help through the
Texas Attorney General’s office in Lubbock at (806) 747-5238. Complaint forms, as well as information on phishing, advance fee fraud, lottery, Internet auctions, spoofing or phony email letters, are available at
www.bbb.org or
www.bbbsouthplains.org or
www.oag.state.tx.us
Thanks to sister BBB in Boston and Massachusettes Attorney General
for sharing this information with the entire BBB system.
