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How to Avoid a Counterfeit Check Scam

July 1, 2020
How to Avoid a Counterfeit Check Scam
It’s important to know the facts about checks before you accept them. The FTC (Federal Trade Commission) educates us about counterfeit checks and how to avoid a scam: 

Just because funds are available on a check you’ve deposited into your account doesn’t mean the check is good. It’s best not to rely on money from any type of check (cashier, business or personal check, or money order) unless you know and trust the person you’re dealing with or, better yet - until the financial institution confirms that the check has cleared. Forgeries can take weeks to be discovered and untangled. 

The bottom line is that until the financial institution confirms that the funds from the check have been cleared and deposited into your account, you are responsible for any funds you withdraw against that check.

Things to know before accepting a check:

  1. Throw away any offer that asks you to pay for a prize or a gift. If it’s free or a gift, you shouldn’t have to pay for it. Free is free.
  2. Resist the urge to enter foreign lotteries. It’s illegal to play a foreign lottery through the mail or the telephone, and most foreign lottery solicitations are phony.
  3. Know who you’re dealing with, and never wire money to strangers.
  4. If you’re selling something, don’t accept a personal or cashier’s check for more than the selling price, no matter how tempting the offer or how convincing the story. Ask the buyer to write the check for the correct amount. If the buyer refuses to send the correct amount, return the check. Don’t send the merchandise.
  5. As a seller, you can suggest an alternative way for the buyer to pay, like an escrow service or online payment service. There may be a charge for an escrow service. If the buyer insists on using a particular escrow or online payment service you’ve never heard of, check it out. Visit its website, and read its terms of agreement and privacy policy. Call the customer service line. If there isn’t one - or if you call and can’t get answers about the service’s reliability - don’t use the service.
  6. If you accept payment by a personal or cashier’s check, ask for a check drawn on a local financial institution, or a financial institution with a local branch. That way, you can make a personal visit to make sure the check is valid. If that’s not possible, call the financial institution where the check was purchased, and ask if it is valid. Get their phone number from an Internet site that you know and trust, not from the check or from the person who gave you the check.
  7. If the buyer insists that you wire back funds, end the transaction immediately. Legitimate buyers don’t pressure you to send money by wire transfer services. In addition, you have little recourse if there’s a problem with a wire transaction.
  8. Resist any pressure to "act now." If the buyer’s offer is good now, it should be good after the check clears.
  9. Always be aware and if you’re not sure of something, always contact your financial institution for help.