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Watch out for fake checks

By Marcie Geffner · Bankrate.com
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.

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