Banking Blog

Finance Blogs » Banking Blog » Watch out for fake checks

Watch out for fake checks

By Marcie Geffner ·
Monday, November 15, 2010
Posted: 9 am ET

Fake checks are nothing new, but too many consumers are still faked out, i.e., victimized, by these scams.

That's why the Consumer Federation of America, or CFA, and a lengthy list of government agencies and financial institutions in Tennessee recently announced plans to offer a consumer brochure to any customer who deposits or withdraws more than $1,000. So far, 23 banks and credit unions in the state have signed up to participate.

The program, also in other states, is a healthy reminder of how these scams work and what consumers should know about them.

Here are some pointers:

• Fake checks look very real.

• Fake checks come with a proviso that the consumer must send money to get the full amount. For example, the check might be described as "an advance" on a "prize" won in a sweepstake or lottery, and the consumer may be instructed to send money, supposedly the "taxes" owed on the "prize."

• Fake checks operate on consumers' faith in the banking system. The consumer can access the funds within 24 to 48 hours, but if a check proves fake days or weeks later, the bank can refuse to honor it and the consumer is then out the money that he or she paid in advance.

• Fake checks may be associated with work-at-home or mystery shopper "jobs," in which the consumer is expected to pay money upfront for "supplies" or "purchases" and is later sent a "payment" that bounces when it's deposited or cashed.

• Fake checks cost consumers $3,000 to $4,000, on average, according to the CFA.

The bottom line is that consumers should be wary of checks that seem too good to be true and deals that require payment upfront for a sum to be received later. If a check feels like a scam, trust your instinct and just say no.

Seen a fake check? Share the details here.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.