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How to Spot a Check Scam
There are a lot of people out there who are looking to take advantage of you. Using check scams and counterfeit checks has become one of the most popular ways for con artists to get their hands on your money.
They look for your contact information in newspaper classifieds, send you deceiving emails and even try to trick you on social networking sites and chat rooms.
We tend to assume that it's mostly senior citizens who become prey to these types of crimes. But stay at home mother, college students and many others are also targets of check scams.
When you cash or deposit personal checks and money orders, they are accepted based on your identification. Banks, credit unions and check cashing stores have no information on the source of the check. Be aware that you accept the risk when you cash checks, and you will be the one held responsible if it is a counterfeit check.
According to the National Consumers League, most check scam victims lose an average of $3,000 to $4,000 dollars. That's a significant financial hit for just about anyone. Plus, your involvement in a check scam could mean you lose your bank account, have issues opening new accounts and ruin your credit score.
Let's take a look at some of the most popular fake check scams so you'll be able to spot the scammers before they swindle you.
Prize Money
Congratulations! You're the lucky winner of a big cash prize and you didn't even know it!
Sweepstakes, lottery schemes and special grants are a good example of scams involving fake checks. It's tempting to respond to these types of tricks because everybody likes to be a winner. The scammers may even use the name of a recognizable sweepstakes company or they say you won the lottery in another country.
All you have to do is cash a check, wire them some of the money and wait for the rest.
Here's What's Wrong: Genuine sweepstakes companies will never contact you by email or regular mail. A real company would use certified mail in this case, and you'd never be asked to pay a fee to receive a prize. Not to mention the fact that you probably wouldn't win a contest you never entered in the first place. And why would an organization that gives away grant money give it to you if you never even asked?
Unexpected Inheritance
Apparently you have a long lost relative whom you've never met, and good old Uncle Charlie left you a nice sum of money as an inheritance!
You probably received an email or letter asking you to first cash a couple of very convincing business checks and send some of the money back to pay taxes on your new inheritance.
Here's What's Wrong: You'd never pay taxes to a company, you'd pay them straight to the government. Plus, if Uncle Charlie liked you so much, how come you've never met him?
Overpayment
Someone conducting business with you claims they sent you too much money by mistake. Or maybe they want to pay you with a check from someone who owes them money - and they want you to wire them the difference.
Here's What's Wrong: A legit buyer should be more than willing to send you a personal check with the exact amount owed, and there's no reason a different person should send a payment. Even if the potential buyer claims to be from another country - and is having difficulty with currency differences - it should not be impossible to send money electronically from practically any country.
Keep in mind that if you deal with someone directly instead of through the online auction website where you posted an item for sale, you'll lose any protection that site may have offered.
Cries for Help
Someone is having a medical emergency or is stranded some place with their kids and needs you to help them out. For some reason, they need you to cash a check and then send the money back to them. Maybe it even comes from the email address of someone you know personally.
Here's What's Wrong: These types of scams are the dirtiest because they prey on people with good intentions. Realize that it is possible for hackers to gain control of personal emails and use them for scams. If you get a fishy email or letter from someone you know, contact them first before doing anything.
Foreign Business Deals
These are some of the most common types of scams involving checks and money orders. A foreign dignitary needs your help transferring a large sum of money from their country to your bank account. Or perhaps someone tells you they got the money illegally and can't go through the usual process.
Here's What's Wrong: Ask yourself some common sense questions. Why would a wealthy foreign dignitary need your help in the first place? Couldn't they hire anyone to help them with financial issues? If they got the money illegally, why would you trust someone who already confesses to be a crook?
Work From Home
Here's a great job offer. Lots of money and you'll hardly need to work. All they want you to do is deposit checks in your account, send some money to them and keep some for yourself. Maybe they want you to be a "mystery shopper." Just buy a couple of things with the money from these business checks and send the rest back to them.
Here's What's Wrong: Real companies do not operate this way. If you get a random job offer you've never applied for - it's probably a trick. An actual employer would most likely ask for a background check, or at the very least they'd want to conduct an interview before hiring you.
The Big Warning Signs
You've probably noticed some common themes in all of these scams.
One is that they're all offers that are too good to be true.
The other is requesting the victim to send money after cashing a fake check. That's the biggest give away! If someone wants you to conduct financially business for them it's probably a scam.
It is perfectly safe to use business and personal checks in your day to day life. However, you do need to be aware of the different tactics used to abuse the check system.
You can learn even more about check scams by visiting FakeChecks.org.
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