Fake checks target 20-somethings
Scams aimed at generation that doesn’t really know how paper checks work.
‘Overpayment’ scam has risen 65% since 2015 NEW YORK TIMES
Fraud involving fake checks has mushroomed in recent years, and the victims are often young adults, a new federal analysis found.
In fake check schemes, criminals send checks to their victims, who deposit them.
The money initially shows up in the victims’ bank accounts. Then the criminals — using a variety of ploys, like phony job offers, “overpayment” for an item bought online or bogus sweepstakes — persuade the victims to send some of the money back, often by wire transfer or a gift card. The check eventually bounces, leaving the victim owing money to the bank.
Reports of check fraud have risen 65 percent since 2015, and the typical loss is about $2,000 — much higher than losses for other types of fraud, the Federal Trade Commission reported this month. Last year, the commission’s fraud network received more than 27,000 reports of fake check scams, with losses of more than $28 million.
People in their 20s are more than twice as likely as those over 30 to report losing money in the schemes, the commission found. College students, for instance, have reported that the scam started with a message to their student email address.
“It’s really jarring to see twice as many people in their 20s reporting losses,” said Monica Vaca, associate director of consumer response and operations at the FTC.
One reason young people may be more likely to become victims is that they are probably less familiar with how paper checks work, experts say. While federal rules require that banks make funds available quickly for withdrawal — usually within a day or two, depending on the type of check — there can be a delay of several days or even weeks before a check is fully verified.
“They’re just not used to writing checks,” said John Breyault, vice president of policy at the National Consumer League, an advocacy group. He added that this meant they were even less familiar than most Americans with the mechanics of check processing. Breyault cited a study that found about a third of Generation Z, whose oldest members are in their mid-20s, had never used a paper check.
Also, check ruses often involve an offer of employment, which young adults may find attractive. About half of the people who reported a fake-check scam to the FTC last year said they had been offered a job or some other way to earn cash, such as being hired as a “mystery” shopper or participating in “car wrap” advertising gigs.
The pitches vary, but all check scams have two elements: a check to deposit and a rationale for why you must send some of the money to someone else, perhaps by wiring it through a money transfer service or by loading cash onto a gift card (Google Play and iTunes are popular) and providing the PIN.
“Con artists favor these payment methods because once the money is sent,” the FTC said, “it is almost impossible to trace or reverse.”
In one account detailed in a Better Business Bureau report in 2018, a student in Oakland, Calif., received an offer at her college email address. The “very professional looking” message said she could earn $250 a week by driving her car around after having it “wrapped” with an ad for Mountain Dew. (Banks have issued warnings about “shrink wrap” scams involving beer and energy drink brands.)
She took the job to help pay her tuition, and received a check in the mail for $4,850 — ostensibly to pay for the wrap job. She deposited the check and the next day was able to withdraw $3,500, which she redeposited — as instructed — into a separate bank account held by the “car specialist.”
The student grew suspicious, however, when she received a text message telling her to withdraw an additional $500 and put it on an iTunes gift card, and she reported the situation to police. The criminal’s bank account had been closed, and the money was gone. Her own bank demanded that she repay the $3,500, so she agreed to an installment plan to pay off her losses.
Think you wouldn’t fall for it? Think again. People fall prey to schemes because of “optimism bias,” a bureau report found; they think typical victims are older, gullible or even stupid and don’t see themselves that way. In truth, the Better Business Bureau report noted, “we are all vulnerable.”
Here are some questions and answers about fake check fraud:
Q: If the check was fake and I was a victim, why do I have to repay my bank?
A: Customers are responsible for bounced checks because they are generally in the best position to evaluate whether a check they deposit is legitimate, said Nessa Feddis, senior vice president at the American Bankers Association.
The law requires banks to make funds available because most checks are valid, she said, and people need the money to pay expenses. But “just because money is in the account doesn’t mean the check is good,” Feddis said.
It’s only when the check works its way through the verification process that it is discovered to be a fake. Criminals take advantage of the time to trick their victims.
Victims often say they felt something was “fishy,” Feddis said. “We encourage people to trust their instincts,” she said. If something doesn’t seem right, ask questions and talk to your bank before proceeding, she said. Be cautious if you don’t know the person offering the check.
“Be wary of strangers,” she added.
For more information, visit the association’s website.
Q: How can I tell if a check is legitimate?
A: The Better Business Bureau offers tips for identifying fake checks. But it’s increasingly difficult, even for bank employees, to spot a counterfeit because advanced graphics and printing technology make it easy to create real-looking fake checks, the Federal Deposit Insurance Corp. said.
“If someone you don’t know initiated the payment, be skeptical and proceed cautiously,” the FDIC advised.
Fake checks may be made out for more than the expected amount; that’s often how criminals persuade people to send the “overpayment” back to them. Make sure the check was issued by a legitimate bank: You can check an institution’s name on the FDIC’s BankFind tool.
If the check looks real but someone is asking you to cash it and send money back, that’s a red flag. There’s virtually no legitimate reason for that sort of request, the FTC said.
Q: What if I am a victim of fake check fraud?
A: You should notify your bank as soon as you realize what has happened. Depending on the circumstances, your institution may agree to cover the loss, said Breyault of the National Consumer League.
The FDIC suggests immediately notifying one or more agencies. You can report the fraud to the FTC on its complaint website. If the fake check arrived by mail, you can notify the U.S. Postal Inspection Service. You can notify your state or local consumer protection agency, which can usually be found through your state attorney general.
For possible online crimes involving fake checks and money orders, you can file a complaint with the FBI’s Internet Crime Complaint Center.
The Better Business Bureau also offers a fraud complaint website.