With the rise of digital banking and mobile payments, criminals have become increasingly sophisticated in their methods for stealing funds. If you open a bank account online, it’s essential to stay informed about check fraud scams to protect your finances from potential loss.
Here are some of the most prevalent ones:
Counterfeit Checks
Counterfeit checks are one of the most common types of check fraud. In this scam, criminals use high-quality printing technology to create fake checks that appear legitimate. These counterfeit checks are then used to make fraudulent purchases or withdrawals.
How it works:
- The scammer either forges a check or uses a fake check to deposit money into their account.
- The victim may unknowingly accept a counterfeit check for goods or services and deposit it into their own account.
- When the check is discovered to be fraudulent, the bank reverses the transaction, leaving the victim with a financial loss.
How to avoid it:
- Always verify the authenticity of a check before depositing it.
- Look for irregularities in the check, such as blurry fonts, unusual watermarking, or incorrect routing numbers.
- Don’t accept checks from unknown or untrustworthy sources, especially for large transactions.
Check Washing
Check washing is a type of fraud where criminals steal a check, then chemically erase the ink on the payee, amount, and other written details. They then rewrite the check with their own name and a larger amount, cashing it out for their benefit.
How it works:
- The fraudster steals a paper check, often from a mailbox.
- Using chemicals or solvents, they remove the ink and alter the payee’s name and the amount of the check.
- The altered check is then cashed or deposited into a fraudulent account.
How to avoid it:
- Use gel or ballpoint pens when writing checks to make it harder for ink to be removed.
- Opt for electronic payments when possible to avoid using paper checks.
- Monitor your bank statements regularly to identify suspicious activity quickly.
Check Kiting
Check kiting involves moving money between accounts using checks that are written on insufficient funds. The scammer takes advantage of the time it takes for a check to clear to make it appear as though there are available funds when there aren’t.
How it works:
- The fraudster writes a check from Account A (which doesn’t have sufficient funds) to deposit into Account B.
- They then withdraw money from Account B before the check from Account A clears.
- The cycle continues, with the fraudster using checks to transfer funds between accounts, effectively creating artificial balances and defrauding the bank.
How to avoid it:
- Always ensure that your checking account has enough funds before writing a check.
- Banks often flag check kiting, but it’s still important to keep an eye on your balances and transactions.
- If you’re unsure about the status of a check, contact your bank before issuing or accepting it.
Overpayment Scams
In an overpayment scam, the scammer sends a check for more than the agreed-upon amount for a product or service, then requests that the excess money be returned via wire transfer or gift cards.
How it works:
- The scammer offers to buy something from you (like a car, electronics, or other valuable items) and sends you a check for more than the asking price.
- They claim it was a mistake and ask you to send the difference back to them.
- Once the victim sends the money, the check bounces, and the fraudster disappears with the refund.
How to avoid it:
- Always verify checks before sending money to someone, especially if the check amount exceeds the agreed-upon price.
- Don’t wire money or send gift cards as a form of payment or refund to strangers.
- Trust your instincts: if something seems off about the transaction, it probably is.
Protect Yourself from Check Fraud Scams
Check fraud scams are a real threat that can result in significant financial losses. By understanding the common types of fraud and implementing preventative measures, you can better protect yourself from falling victim to these schemes.
Be vigilant and cautious with checks, and always monitor your account for any unauthorized transactions.
