How to Spot a Fake Check

Common Check Fraud Scams

While physical checks are less common than they used to be, check fraud is still a major concern. Not only does it impact the banking industry, but it can impact your own bank account and finances. Being aware of these common scams will make it easier for you to spot a fake check or financial fraud. If a financial situation sounds too good to be true, it probably is.

Here are some common scams that involve check fraud to watch out for.

Personal Assistant

You may have just landed an awesome new job as a personal assistant, but you find that the bulk of your time is spent buying gift cards for your client. Of course, you’re reimbursed for your purchases—by a check sent through the mail. Your client is a scammer who instantly spends the gift card and has sent a fraudulent check. By the time the bank has identified the fraud, the client is long gone and you’re on the hook for the money owed.

Work from Home

This type of check fraud could be appealing to people who already work out of their homes or those who do not already work, because it seems like an easy paycheck for minimal work. The employer, who is actually a scammer, is typically a company based in another state or country. They may ask you to sell or ship products or pay for certifications or supplies without reimbursing you for the money you’ve spent. Again, what appears to be reimbursement will often be a fraudulent check.

Financial Windfall

You may have received an email from a dethroned prince who needs you to hold on to a large sum of money for him until he can reclaim his title. As thanks for doing him this favor, you get to keep some of his fortune. However, there is no prince, only a scammer, and your reward for moving his money around is a check that bounces and having to pay his foreign transaction fees and taxes.

This scam is not always perpetrated by someone claiming to be foreign royalty. Variations include being told you’ve received an inheritance or won a large sum of money.

Overpayment

Thanks to online money transfers, this scam is becoming less common, but if you sell something online, especially on an auction website, you should still be aware of this kind of check fraud. Let’s say you’ve sold an old dresser and the buyer has written you a check for hundreds of dollars over the agreed-upon price. The buyer frantically emails you and asks you to wire back the overage, and you do, but when you go to cash the check you initially received, it bounces, and suddenly you’ve found that you’ve actually paid someone to take a dresser from you.

Mystery Shopper

Secret or mystery shopping is a legitimate job that involves visiting retailers and reviewing their service and setup, which is what can make this scam so effective. If you’re approached to participate in secret shopping, you should be wary if you’re asked to receive payment in advance. In many cases, you might be sent a check with instructions to deposit it and spend a portion on the assignment and then send the remaining money back. The goal of this scam is for you to send money back to the fraudsters before you realize that the check you initially received was fake.

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How to Tell if a Check is Fake

Physical checks are becoming less common in the Internet Age, but they’re still around. This lack of ubiquity may make it harder to tell if you’ve received a fake check, since you’ve become less familiar with them over time. These kinds of scams tend to work because fake checks look exactly like real checks, even to bank employees. They may even be real checks that belong to individuals who are victims of identity theft.

Banks are required by law to make a portion of funds available within two days of a deposit, even if the check is fraudulent. It can take weeks for a fake check to be discovered. By then, a scammer has any money you’ve sent them, and you’re stuck repaying the bank.

If you receive a paper check you’re not sure about, here’s how to know if it’s a fake:

• The edges. Most legitimate checks will have at least one edge that is perforated or rough. If all four sides are smooth, it may have been printed from a personal computer rather than torn from an actual checkbook.
• Bank information. A fraudulent check may have an incorrect logo or address. If you’re in doubt, check the issuing bank’s website to confirm any information before attempting to cash or deposit the check. Keep your eye on the check number as well, if the check you’ve received doesn’t have this number, or has a number under 400, you may have a fake on your hands.
• Amount of money. If you’re receiving more money than you expect, especially from someone you don’t know well, you should be suspicious. Fake checks are typically written in amounts less than $5,000 thanks to federal rules requiring that deposits of that size be made available within five days. Larger deposits have longer holding periods, so scammers are looking to get their money as quickly as possible and may rely on smaller amounts that are more readily available.
• Red flags. If something seems off about a check, trust your gut. If you notice it’s missing watermarks or other security features, or if there’s no signature or the paper feels too shiny or too flimsy, don’t be afraid to investigate things before attempting to cash or deposit the money.

How to Protect Yourself from Check Fraud

While knowing how to spot a fake check is important, knowing what to do if you’ve received a fake check or been a victim of a scam is also crucial to protect your finances and personal information.

Develop a strict personal policy for accepting paper checks. Don’t be afraid to be overly thorough when verifying a check writer’s identity. If the check is coming from another business, investigate them before taking that check to your bank. Many scammers will use legitimate businesses as a cover; if things don’t seem to look right, do your research.

If you’ve deposited a check that you weren’t totally sure about, wait to spend that money. If it turns out to be a fake check, the bank may ask for that money back. If you’ve already spent it, your financial institution may freeze your account or take legal action to get that money back. Similarly, don’t make a habit of sending money to people you don’t know. If a stranger is asking you for money, you’re right to be wary. A legitimate company or sweepstakes will never ask you to send them money.

Now that you know how to spot a fake check, you can alert authorities of scams. Let your bank and local law enforcement know about an incident and report the scam to the Federal Trade Commission. Because check fraud typically happens in small amounts at a time, scammers may be targeting many people at once. If you take the time to report a scam, you may stop others from falling victim to fraud.

For additional peace of mind when it comes to your personal finances, use OneDrive Personal Vault from Microsoft 365 to keep track of your banking. Protect sensitive files with identity verification and still access them from anywhere thanks to cloud storage. Don’t take chances with your personal or financial information and learn how to spot a fake check.