According to the BBB Risk Index, fake check scams are the second most risky scam, behind home improvement scams. The BBB Risk Index measures risk along three dimension: exposure (how likely you are to be exposed to the scam), susceptibility (if you are exposed, how likely you are to lose money) and monetary loss (if you do lose money, how much it’s likely to be). Exposure to fake check scams is low, they only account for 3.1% of reports to BBB Scam Tracker. However, susceptibility and monetary loss are both high – 15.8% and $1,471, respectively.
Fake check scams can be perpetrated through many types of checks: personal checks, business checks, traveler’s checks and even cashier’s checks, among others. This may be why susceptibility to fake check scams is relatively high. Cashier’s checks in particular have long been considered a trusted and risk-free source of payment – some think that they’re more secure than personal checks, electronic payments and even cash.
According to the U.S. Treasury’s Office of the Comptroller of the Currency, a cashier’s check, or bank check, “is a check that is issued by a bank, and sold to its customer or another purchaser, that is a direct obligation of the bank”. If the check is actually issued by a bank, the ultimate recipient is in the clear. In the past, security features on cashier’s checks made them difficult to fake. However, current technology has made these checks easier to forge. Because consumers are often unaware that cashier’s checks, as well as other types of checks, are susceptible to fraud, fake check scams are especially risky.
Fake check scams usually follow a distinct pattern. The victim receives a fraudulent check and deposits it in their bank account. The bank confirms that the check has cleared and the money is available for withdrawal. However, it can actually take weeks for a financial institution to realize a check is fake. When they do, the money is withdrawn from the victim’s account – leaving them in the dust. At that point, the scammer is nowhere to be found.
Being aware of different types of scams and how they work is the best way to avoid them. Follow these tips from your BBB to defend yourself from fake check scams:
To learn more about avoiding fake check scams, visit bbb.org/fakecheckscam. The website of the Office of the Comptroller of the Currency has helpful information for avoiding cashier’s check fraud in particular. If you’ve encountered a fake check scam, or any other type of fraud, report it to BBB Scam Tracker.