Recognize check fraud scams and avoid them

To protect consumers from costly check fraud the Consumer Federation of America (CFA) has recently published and distributed a brochure with the telltale warning signs of check fraud and how to defend against it.
The CFA, New York State Consumer Protection Board (CPB) and a group of banks and credit unions are joining forces to help distribute these brochures and aid consumers in the fight against these scammers.
The “Don’t Become a Target” brochure will be handed out at 22 participating New York area banks and credit unions on deposit checks, money orders and withdrawals $1,000 and up, as well as at other participants nationwide.
“The key is to prevent consumers from being victimized by educating them at the very point they may be at risk,” said Susan Grant, CFA’s director of consumer protection.
The brochure outlines the different scams consumers should be on the lookout for. All of the scams include the consumer sending money somewhere else.
“The message that we want to give customers is that there is no legitimate reason why anyone who wants to give [the consumer] money would ask [the consumer] to send money anywhere in return,” said Mindy A. Bockstein, CPB’s chairperson and executive director. If this is the case, it is a scam, she said.
While senior citizens may be more susceptible, especially those on a fixed income, and see the chance to subsidize their income, the scammers are looking for anybody that will fall for their con.
In a fake check scam, the consumer receives a genuine-looking check or money order and is asked to deposit the check and then wire money somewhere in return.
For instance, the check may be described as an “advance” on millions that the consumer has won in a sweepstakes or lottery. The consumer is instructed to send money to pay the taxes and claim the rest of the prize.
“The most prevalent scam is the secret shopper,” said Gary Brown, director of communications for the CPB. The consumer is recruited to work as a “mystery shopper” or to process payments for a company and is instructed to wire money somewhere as part of the job. No matter the story, the check or money order is phony, and when it bounces, the victim owes the money back to the financial institution where it was deposited or cashed.
The average loss is $3,000 to $4,000.
“Once people lose money, it’s almost impossible to recover,” said Brown. This is because many scams originate overseas, he said.
There are 22 banks and credit unions participating in handing out the brochures, including Brooklyn Cooperative Federal Credit Union and the Nassau Financial Federal Credit Union.
The program has no end date. Brown said that hopefully the public will get word and know what to lookout for, and that it will run “as long as it needs to.”
More information about the preventing check fraud, including an electronic version of the brochure in English and Spanish and a PowerPoint presentation, can be found on CFA’s web site, www.consumerfed.org/fakecheckscams.