Overseas con artists are sending billions of dollars worth of counterfeit checks and money orders to the United States. They are using these high-quality forgeries to steal a staggering amount of money from unsuspecting victims.
Fake checks are now the top telemarketing scam and the second most common Internet scam reported to the National Consumers League’s Fraud Information Center. The average victim loses about $4,000.
These bogus checks are used to buy things, from furniture to used cars, advertised in newspaper and online classified ads. They are also used to rent apartments. Fake checks are now part of work-at-home schemes and contest scams.
The storyline varies depending on the specific con, but the victim is always told to do the same thing — deposit the fake check or money order into their own account and then wire transfer a portion of the funds back to the sender.
The swindlers prefer wire transactions because they are fast and generally irreversible. Once you realize you have been scammed, you can’t stop payment. It is also easy for them to get the money this way. It can be picked up in cash almost anywhere in the world.
“The checks are really convincing and so are the stories the con artists give when they send them to people,” says Susan Grant, who runs the National Fraud Information Center. “The checks look so realistic that even bank tellers can’t tell that they are phony.”
U.S. postal inspectors are working with law enforcement agencies in other countries to break up the international crime rings that run these check scams. Between January and August of this year, they seized more than a half-million counterfeit checks worth $2.1 billion dollars headed to the U.S. from Nigeria, the Netherlands, England, and Canada. As part of this global crackdown 77 people have been arrested. But the counterfeit checks keep coming.
“These guys are very good at what they do,” says Assistant Chief Postal Inspector Harold Lane. “They’re con men so it’s very convincing.”
They fooled Jill Parker, a businesswoman in Richmond, Virginia, who had an apartment for rent in Chicago. She got a response to her ad on Craig’s List from someone who said he was moving there from the United Kingdom.
In his e-mail the cyber-thief told Parker he said was getting a $25,000 relocation package. “I’m just going to have them make out the check to you,” he wrote her. “And you can take out what I owe you and wire the rest to my agent who will use it to furnish my apartment.”
Parker waited a few days after depositing the check before she wired back the bulk of the check, $21,000, as instructed. She called the bank and was told the check had cleared.
“And I said, are you sure? They money is in my account? And they said ‘yes, we’re looking at your account online right now and it’s there.’ ”
About 10 days later, Parker got a call from the bank telling her the $25,000 check was bad and the deposit was being reversed. She had to replace the missing funds.
“They say they have no liability,” Parker told me. “As far as they were concerned, it’s tough luck.”
Some victims get a check and a letter that is made to look like it’s from Publishers Clearinghouse, Reader’s Digest, or some other sweepstakes.
A few days after depositing the check, they get a call or e-mail saying they have won another prize. But this time they must send some money to cover shipping or taxes. It is easy to assume this is legitimate, since the money from the prize check is already in their account.
Warning: There is no second prize and the original check is going to bounce. So, you will lose twice! “It’s a hideous scam,” says Christopher Irving of Publishers Clearinghouse, “one we are very concerned about.”
Remember, no matter what the pitch, you never have to send money to enter a contest or collect your prize. Never! That’s a sure sign of a scam.
“There’s a basic lack of communication between customers and banks,” says Susan Grant of the National Consumers League. The con artists know that most people don’t understand the difference between the funds being available and the check being good.
Under federal law, you have the right to withdraw money after making a deposit relatively quickly — within one to five days — depending on the type of check or money order that you’ve deposited. But it can take weeks or months for a counterfeit to be discovered.
“When you ask your bank ‘has the check cleared’ and you are told ‘yes,’ it means the funds are available to you,” Grant explains. “It doesn’t necessarily mean that the check is good. The bank doesn’t have any way of knowing that until and unless it comes back as bad.”
When the check or money order bounces, the bank comes after the victim to replace those missing funds. For some people that means taking out a loan to pay back the bank. I spoke to a woman who had her car repossessed to cover the bad money orders she cashed. In some cases, customers are being sued by their bank.
Grant says some victims are having their accounts closed. If this information is reported to the banking industry database of “deadbeat” customers, that person may not be able to open another bank account anywhere.
There are also cases where victims of this scam are arrested and prosecuted for check fraud because it looks like they are trying to pass bad checks.
Victims such as Parker say more should be done. “We would have backed away from the deal,” she says, “if the bank had indicated to us in any way … that there were any issues with the money.”
“Everybody wants to blame the bank,” says Nessa Feddis with the American Bankers Association, who told me the industry has been working to warn people about this scam for years.
No matter what story accompanies the check, the con artist is usually overseas and always wants some money wired to him or one of his associates right away.
The bottom line: Avoid any transaction that involves a check or money order where you are required to wire back any money. There is no legitimate reason for that.