Understanding Fake Check Scams and How They Work

Learn How Fake Check Scams Work, the Most Common Tactics Fraudsters Use, and How to Protect Yourself From Financial Loss.

Even with modern banking technology that allows customers to send and receive funds electronically, physical checks continue to be a widely used form of payment. Unfortunately, fraudsters are aware of the opportunities to compromise consumer information through check fraud attempts. Without proper safeguards surrounding the use of checks, scammers can easily take advantage of individuals, leaving them financially vulnerable. Join our experts in exploring different fake check scams and how they are executed.

Let’s Dive Into the Basics

What exactly is a fake check? Also referred to as “counterfeit” checks, these are used to generate money that does not exist. Fraudsters are innovative in deceiving consumers and bank employees with fake check scams. Here are a few tactics they use to trick individuals into giving up their hard-earned money.

You’ve Been Overpaid

Overpayment scams are very simplistic. Fraudsters will purchase an item online, whether from eBay, Mercari, Etsy, or Facebook Marketplace, and they will ask if a check is an acceptable form of payment. Those who accept the payment have become vulnerable to a fake check scam.

• How it Works:

  The fraudster will send a check for the claimed item(s) for more than the original asking price. The overpayment results in the fraudster circling back and requesting that the overpaid funds be sent back to them.

• Consequences:

  The reseller will deposit the original check

  (Funds will be made available, but the check has not “cleared.”)

  and then refund the fraudster the “overpaid” balance. The reseller will not become aware of the scam until their financial institution declines the unknowingly fake check and retrieves the funds that were made available when the check was initially deposited.

Fake Job Postings

The job market can be volatile, and when you insert fraudsters creating fake job postings, the experience can worsen. What may seem like your next business adventure could turn out to be a scam aimed at exploiting you financially.

• How it Works:

The fraudster will send you fake checks after you are “hired,” along with instructions to deposit the funds into your account. After the deposit, you will be instructed to purchase gift cards and return them to your employer. The scammer often tries to justify these gift card purchases by claiming they are for customers or employees, stating that it is your responsibility to acquire them.

Job scams can take various forms depending on the tactics used by the fraudsters. Below is a standard method scammers use to exploit their “new hires” for financial gain.

• Consequences:

  Getting hired in the current job market can be a challenge. Fraudsters acknowledge this sense of desperation, especially if you have been searching for some time. Unfortunately, if you become a victim of a fake job scam, you will not only be out of a real job, but you could also suffer financial consequences.

You Won the Grand Prize

Lottery and prize scams are a classic throwback for scammers to really pull at the heartstrings of consumers. I mean, who doesn’t like winning money?

• How it Works:

  Fraudsters often send direct mail or emails to thousands, if not millions, of people with messages like this:

  “Congratulations! You have won our $250,000 sweepstakes. Contact our agent to claim your winnings!”

It sounds enticing, but there's a catch. Once fraudsters have someone hooked, they typically instruct them to deposit a fake check and return a portion of the money as a service fee or to pay the taxes on the winnings.

• Consequences:

  Receiving an email or direct mail piece claiming you have won money or a prize is often a scam. If you respond by sending money back to the fraudster, you may end up in a difficult financial situation, depending on how much was requested.

Fake check scams can be very deceptive and often tailored to target individual consumers. Overpayments, fake job offers, and grand-prize scams are just a few examples of this issue. Tally Rasmussen, Fraud Manager at Frandsen Bank & Trust, advises, “If something seems too good to be true, it’s likely not genuine. If anyone asks you to invent a story or misrepresent the true intentions of a transaction, be alert and treat it as a potential scam attempt.” Join us next time as we discuss identifying fake checks in case you become a target of one of these schemes.