Check fraud: How to spot it and help protect yourself
June 1, 2023 7 min read
Despite the number of services that have gone digital, check fraud is still a major concern. According to data from the Federal Trade Commission (FTC), there were more than 40,000 fake check scams and foreign money offers in 2022. And the financial losses from these scams amounted to more than $124 million.
But consumers can take steps to identify and protect themselves from check fraud. Here’s what to keep in mind when dealing with checks.
- Check fraud occurs when a perpetrator uses stolen checks or when victims unknowingly deposit fake checks.
- Fraudulent checks are usually discovered after money has cleared a bank account, making it more difficult to recover.
- Learning to identify signs of fraud and counterfeit checks can help you protect yourself.
What is check fraud?
Check fraud usually takes place in two ways:
- When checks are taken from someone and used fraudulently: Scammers may steal legitimate checks and change the information on them to redirect the check to a bank account they control. In some cases, checks are stolen from mailboxes before being used or sold on the dark web. This kind of check fraud is a form of identity theft.
- When someone is tricked into depositing a fake check: In this common scam, people are asked to deposit checks for a purpose that sounds legitimate but isn’t actually real. For example, scammers may claim it’s prize money or for a fake job, then ask that the person wire back some of the money from their own account to cover expenses. But because the original check is fraudulent, the victim is left without the money and also down any money they wired to the scammer.
Other types of fraud
There are a number of different methods criminals use to get their hands on other people’s personal information or money. Here are a few other types of fraud and scams.
Some scammers are posing as government agents or representatives of private companies via email, phone or text. Pretending to be a trusted authority with the intention of stealing information is known as phishing.
When it comes to potential check fraud, a scammer might ask someone to:
- Verify their banking or personal information so that they can get a larger or faster payment
- Send money or personal information to release a check
People should contact their bank immediately if they suspect they’ve been impacted by phishing. Capital One customers concerned about their accounts should contact customer support directly.
In addition to check fraud, a stolen check may be used to commit identity theft. Checks can provide scammers with:
- Your name
- Your home address
- Your phone number
- The name of your bank and your bank account number
- A copy of your signature
For more information, check out this guide on how to spot and protect yourself from identity theft.
Don’t underestimate old-fashioned mailbox theft, either. Scammers sometimes try to steal checks from mailboxes.
The U.S. Postal Inspection Service says to check your mailbox regularly to help combat this. You can also sign up for the United States Postal Service’s Informed Delivery service, which gives a heads-up about what’s coming in the mail that day.
How does check fraud work?
While there are many security features designed to protect consumers, fraudulent checks are sometimes accepted by banks. This may be because the scammer was able to replicate security features well enough to fool a bank employee. Or it may be because the check was from someone who’s been the victim of identity theft.
Can you get scammed with a cashier’s check?
Yes, scammers sometimes commit check fraud using fake cashier’s checks. Similarly, scammers may try to use fake money orders or other official-looking checks.
How to spot check fraud
If a scammer has stolen a check from you and used it to commit fraud, mysterious charges may appear in your bank account.
If you receive a check from someone you don’t know, it may be important to verify that it’s a real check. The FTC warns that it might be a scam if a stranger sends you a check and asks you to send them money in return.
The Federal Deposit Insurance Corporation (FDIC) says that people can be on the lookout for check fraud by:
- Making sure the check is from a legitimate bank. While some counterfeit checks may have the name of a legitimate bank, a fake bank name is a giveaway that it’s probably a fake check.
- Checking with the bank that supposedly issued the check to make sure it’s real. But be sure to use the bank’s phone number from their official website—because any numbers listed on the check could be fake. Once you’ve located the bank’s official phone number, call and ask them to verify the check.
- Being wary of checks that came from someone you don’t know—especially if they’re only communicating by email or text message. Another cause for concern is if the messages use bad grammar or contain spelling errors.
- Comparing where the check was postmarked and where the issuing bank is. If the two are not in the same city, this could be a sign of potential fraud. And be especially careful if the check was mailed from overseas.
- Checking to see if the amount of money on the check is correct and as expected. If it’s more than what you agreed on, be on guard. Scammers sometimes write checks for more than expected and then ask the person receiving the check to send the extra money back to them.
- Looking for official watermarks or other security features that would be hard to replicate. If you look up the official watermarks and the ones on the check look different, they may have been falsely replicated.
If you see any of these signs in a check you’ve received, don’t cash the check until you’re sure that it’s real. And if you can’t verify that it’s legitimate by calling the issuing bank, consider reporting it. You can notify the bank whose name is on the check, as well as any websites where you encountered the scammer.
You can also report it to the U.S. Postal Inspection Service, your state attorney general and the FTC. And for online crimes involving fake checks and money orders, you can file an online complaint with the Internet Crime Complaint Center.
Tips for check fraud prevention
While there are many ways a scammer may try to defraud victims, there are a number of steps you can take to help protect yourself from check fraud:
- Verify that the check came from a real financial institution. Call the issuing bank using a number from the bank’s website to verify the check.
- Pass on winnings that require payment. If an issuer says that there’s a processing fee to get a prize, chances are it’s a scam.
- Make sure the written amount is correct. If a check has a higher-than-agreed-upon amount, it could be a sign that the check might be coming from a scammer who will ask for a partial refund before a bank or the victim can catch on to the fraud.
- Don’t use a check to exchange cryptocurrency or gift cards. Scammers may use cryptocurrency or gift cards to get money, which can be difficult for victims to recover.
- Drop checks off inside the post office. Scammers sometimes try to steal checks from mailboxes. Dropping a check off in the post office may be more secure.
- Use U.S. Postal Service resources. The U.S. Postal Inspection Service recommends checking your mailbox regularly. The United States Postal Service also offers an Informed Delivery service, which lets you know what’s coming in the mail that day.
Check fraud in a nutshell
Staying up to date on bank activity and not accepting checks from unknown parties can help protect consumers from check fraud.
To learn more about how to stay protected from fraud, check out this guide on reducing your risk of fraud through mobile security.