You may have already won…a scam

It sounds terrific.  You’ve won a large cash prize and the money’s yours once you pre-pay the taxes. Or someone overpaid you for something you sold online.  Or you signed up for a ‘mystery shopper” gig and got paid more than you were owed due to a ‘bookkeeping error.”  Or you just got a job and they overpay your advance to ‘buy supplies.”

Congratulations. It’s a scam. Fake checks drive many types of scams – like those involving phony prize wins, fake jobs, mystery shoppers, online classified ad sales, and others. In a fake check scam, a person you don’t know asks you to deposit a check – sometimes for several thousand dollars and usually for more than what you are owed – and wire some of the money back to that person. The scammers always have a good story to explain the overpayment – they’re stuck out of the country, they need you to cover taxes or fees, you need to buy supplies, or something else. But by the time your bank discovers you’ve deposited a bad check, the scammer already has the money you sent, and you’re stuck paying the rest of the check back to the bank.

According to the Federal Trade Commission (FTC) it receives tens of thousands of reports each year about fake checks (read all about them here).  Over the last three years, the number of complaints has steadily increased, and so have the dollars lost.

Here’s a tipsheet via the FTC’s new infographic, developed with the American Bankers Association Foundation.  It details some tip-offs that signal a fake check scam and has advice on what to do if you get a check (especially an overpayment) from a stranger – even if the that stranger says they have a job for you, or wants to buy your car based on a classified or online ad. It also has advice on what to do if you get a check from someone you don’t know – don’t rely on the bank to catch it, it’s all up to you.

Luckily, there are indications that financial institutions are becoming more pro-active in protecting perennials from bank fraud, which some estimates range as much as $36.5 billion a year – and each year the crooks get more inventive.  (Ever hear of check washing?) There’s an enlightening report on some new developments here.

Have you ever been targetted in a fake check or other financial scam?  How was it resolved? What advice do you have for others? Let us know in the comments!