How to Spot and Avoid Fake Check Scams
October 27, 2021 • 7 min
Whether it’s a credit card breach or a check cashing scam, fraud happens every day. Unfortunately, Patelco members can be victims as well, even if you’re digitally and financially savvy. Here, we break down common check cashing scams and how to spot them.
How do fake check scams work?
A fake check scam is when a fraudster asks you to help them cash a check. There are several variations of this scam, but they all involve legitimate-looking checks—certified and cashier checks too—and a story about why the fraudster needs you to cash the check.
Maybe the fraudster needs to pay for a funeral but has lost their ID. The fraudster may be a “business” looking for an “employee” whose job it is to cash checks for them. Or the fraudster may “accidentally” overpay for something bought online from you, and then ask for you to refund the balance.
Once they have convinced you to help them, they might ask you to meet them at a cash checking location or they may simply mail you the check to deposit at your credit union. (Note that many check cashing businesses require your personal information and/or financial account details.)
Within a few days or weeks, the check will bounce (either because it’s fake or because there’s no funds in the account the check came from) – leaving you on the hook for the amount with your credit union or with the check cashing business.
What are the common types of fake check scams?
Fake check scams take many forms – here’s a few common fake check scam examples according to the FTC.
- Sad stories — The fraudster desperately needs cash to pay for a medical operation, a funeral, or travel tickets to visit a sick relative. They may approach you outside a check cashing location or financial institution.
- Overpayments – A person buys something from you online (such as Craigslist or eBay) and then “accidentally” sends you a check for too much. They then ask you to refund the balance, perhaps by wiring them the money back or buying a reloadable gift card with the excess.
- Car wrap decals – Fraudsters place an ad online or in a classified newspaper about getting paid to wrap your car in an advertising decal. When you contact them, they send you a check that is supposed to pay for the decal installer. You cash the check and mail the money to the installer – who isn’t an installer but is just the fraudsters.
- Mystery shopping – Fraudsters put ads out pretending to hire people as “mystery shoppers.” Your first job: go evaluate a retailer that sells gift cards, money orders, or does money transfers like Western Union or MoneyGram. You’ll receive a check to buy the gift cards, money orders or wire transfers, and will be instructed to deposit it to your checking account and then use the money to buy the gift cards or money orders. After the fraudster has received the gift cards or money orders, their check will bounce, leaving you on the hook for the money spent.
- Personal assistants – An ad online offers employment as a personal assistant. When you’re hired, your new “boss” sends you a check and asks you to buy gift cards or equipment with the money. Once you give your “boss” the equipment or the gift cards, they disappear – and the check turns out to be fake.
- Sweepstakes prizes — Fraudsters contact you to let you know you’ve won a “prize”, and then they send you a check to cover the taxes or shipping charges associated with that prize. The fraudsters then ask you to cash that check and send money to cover the “shipping” or the “tax.” Legitimate sweepstakes don’t work like this.
What to do if you are scammed or targeted
When in doubt don’t cash that check! Remember that there’s no such thing as free money – and no such thing as easy money either. If you think you’ve been a target or victim of a fake check scam, we’re your trusted resource, so contact us – we’re available at your local branch and at 800.358.8228.
Additionally, report any fake check scam to the Federal Trade Commission via the FTC Complaint Assistant. And if the scam involved the mail (such as a fake check mailed to you), report it to the US Postal Inspection Service at uspis.gov.