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BBB Offers the Following Information Concerning Fake Check Scams:

If someone calls and asks for money, you might be skeptical. But what if the person sends you a check in advance, you cash the check, and your bank tells you that money is in your account? Sounds like a safe deal, especially if it is a cashier's check, which is as good as gold. Right? Wrong.

Here's what crooks know, but you may not: even when a check is credited to your account, it does not mean the check is good. A week or so later, if the check bounces, the bank will want the money back. And you, not the fraudsters, will be on the hook for the funds.

It happens to tens of thousands of people every year. "Buyers" send a check for more than the full price to sellers of cars or other items on Craigslist and other online classifieds sites. "Employers" send a check to "new hires" to buy supplies needed to do the job from home. Sweepstakes or lottery "winners" are given a check to pay taxes so the award can be delivered.

All of these are scams involving counterfeit checks which are often altered versions of business checks from real companies.

Fake check fraud is a huge problem, with complaints to government agencies and consumer advocacy groups doubling over the last three years. Millions of fake checks worth billions of dollars circulate every year.

Here are two things BBB wants you to know and tell your friends about fake check fraud:

Having the funds credited to a bank account does not mean the cashed check is valid.

Federal banking rules require that when someone deposits a check into an account, the bank must make the funds available right away - within a day or two. But the bank also has the right to recover the money from the account holder if the check is counterfeit. It is only when the check works its way back to the bank that supposedly issued the check that it is discovered to be counterfeit.

Cashier's checks and postal money orders can be forged.

A cashier's check is a check guaranteed by a bank, drawn on the bank's own funds and signed by a cashier. Cashier's checks are treated as guaranteed funds because the bank itself, rather than the individual account holder, is responsible for paying the amount of the check. Cashier's checks are commonly required for real estate and brokerage transactions. If a person deposits a cashier's check, the person's bank must credit the account by at least $5000 the next day. The same holds true for postal money orders.


What are fake checks?

Fake checks are simply counterfeited checks, usually copies of business checks from real companies. Three different types of financial documents are commonly involved in fake check frauds: regular checks, cashier's checks, and money orders. Some appear to be created in the U.S. and Canada, but many are shipped in from overseas and then sent to victims.

The regular fake check purports to be from a business, and usually contains a real account and routing number. These are not handwritten, and they look quite professional. The name of the business will appear on the check, and they often include a phone number as well.

Fake Cashier's checks look like they are from a bank or financial institution. A genuine cashier's check is a check guaranteed by a bank, drawn on the bank's own funds and signed by a cashier. Cashier's checks are treated as guaranteed funds because the bank itself, rather than an individual, is responsible for paying the check amount. These are commonly required for real estate and brokerage transactions.

Many financial institutions have seen counterfeit cashier's checks using their information. The Office of Comptroller of the Currency has issued an alert about fake cashier's checks.

Money orders are issued by banks and the United States Postal Service. These are effectively a cash substitute. Money orders can be cashed at a bank and postal money orders at a post office. They are printed on special paper with watermarks to make them difficult to counterfeit. The Postal Service has issued an alert on how to detect a fake money order or a money order scam.

Fake checks are used in a variety of frauds such as mystery shopper or nanny "jobs", as well as prize and sweepstakes scams. What the scams have in common is that victims have to send money to the fraudsters. After depositing the check, victims are asked to quickly wire money or buy gift cards that eventually make their way to the fraudsters before the checks bounce.

Regardless of the format, the checks usually look professional and convincing. Fraudsters have been known to obtain the names and account information of legitimate businesses by fishing inside mailboxes with sticky tape or even stealing entire mailboxes off the street, hoping to find business checks inside. Crooks then scan and Photoshop checks.

If you receive an unsolicited check and unsure if it's a scam, you can contact your BBB.