As a society, we are starting to use paper checks less and less. In fact, checks rank behind cash, credit cards, and debit cards in how people make payments in the United States. Yet even with decreasing usage, check fraud is still happening, and we all need to make ourselves more aware of how to spot the fraud.
First, why do check scams still happen? It’s easy. Check scams require minimal effort on behalf of the scammer, and they often prey upon those who have limited financial knowledge, are more trusting or are desperate for money.
Here are some common examples of fake check scams:
You’ve won! Win a contest you don’t recall entering? It’s likely a scam. Scammers tell you that you can only claim the prize by first paying taxes, service charges or some other believable sounding fee before you can claim the grand prize. Plus, they typically give you a small window of time to do this, rushing you into a situation and giving you less time to think critically.
You were overpaid! This is a very common scam over the phone, over email and through the mail. A local company sends you a refund, for some reason. But they accidentally sent you too much money! So instead of resending you a check with the correct amount, they ask you to deposit the check and send them the overage in the form of a money order or gift cards.
TIP: Any time anyone EVER asks you to pay with gift cards, it’s a scam. Why gift cards? They are easy for people to buy and have fewer protections than other types of payments. Gift cards are more like cash, once you use the card the money is gone. Plus, a scammer can just ask you for the gift card number and PIN over the phone, so it’s instant money for them.
You can advertise! You receive a check to do something such as getting your vehicle branded with a company logo. You are instructed to deposit the check and transfer funds to the company’s local installer to pay them. They also promise additional payments each month. But the check will then bounce, and you will be out the cash you transferred to the scammers account.
In most cases, if you receive unexpected money that sounds too good to be true, it usually is. Always research the company that is being used, and don’t use the numbers or websites listed on the possible scam letter. Many times, these are fake call centers and websites to make you think you are talking to the legitimate company when in fact you are not.
Even though checks are not as popular as they once were, there are still tens of thousands of people that fall victim to fake check scams each year. Always be wary of when you receive a check you did not expect. If you aren’t sure if the situation is a scam or not, talk with someone your trust or contact us. We want our members to be educated on the types of scams out there and let us help you when you have questions.