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Fake Check Check Fraud

This scam involves a seller advertising a valuable item over the Internet. A "buyer, or buyer's agent" often from a foreign country, contacts the seller about purchasing the item and states that he plans to use a cashier's check or regular check issued from a bank/credit union in the United States. Then the "buyer" tells the seller that he either "mistakenly" sent too large a check, or that he will be sending a check for more than the purchase price. In either event, the seller is instructed to immediately wire the "balance" back to the buyer, through services such as Western Union or MoneyGram, which you can send from WalMart.. Not even the FBI can trace a wire transfer as you can pick it up anywhere in the state.

Under a federal banking law, the customer's bank is required to make those funds available to its customer on the business day after the funds are deposited. So, the deposit shows up in the sellers bank account they are able to withdraw the "overpayment" before the check winds its way back to the bank that supposedly issued it (since it is fraudulent). The cashiers check is either cancelled or was a counterfeit check from a defunct branch of a bank. That can take 7 days, or even longer. Of course, after wiring the money back to the buyer, the scam artist is nowhere to be found.

Some checks may appear to be from a US bank but, upon closer inspection, include foreign country or city names. We had one from a U.S. Bank (National City Bank, a regional bank in the east for a rental in Calif. I assume so it will take longer to clear) The check had been voided. The address of the person the funds were to wired to was fake.

Example correspondence:
usgyms.net
paulm.com
here

Overpayment Alert at ftc.gov Says:

According to FTC officials, the scams work like this: Someone responds to your posting or ad, and offers to use a cashier's check, personal check or corporate check to pay for the item you're selling. At the last minute, the so-called buyer (or the buyer's "agent") comes up with a reason for writing the check for more than the purchase price, and asks you to wire back the difference after you deposit the check. You deposit the check and wire the funds back to the "buyers." Later, the check bounces, leaving you liable for the entire amount.

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About/scams at CraigsList.org says:

FAKE CASHIER CHECKS & MONEY ORDERS ARE COMMON, and BANKS WILL CASH THEM AND THEN HOLD YOU RESPONSIBLE when the fake is discovered weeks later.

  • you receive an email (examples below) offering to buy your item, or rent your apartment, sight unseen.
  • cashier's check is offered for your sale item, as a deposit for an apartment, or for just about anything else of value.
  • value of cashier's check often far exceeds your item - scammer offers to "trust" you, and asks you to wire the balance via money transfer service
  • banks will often cash these fake checks AND THEN HOLD YOU RESPONSIBLE WHEN THE CHECK FAILS TO CLEAR, including criminal prosecution in some cases!
  • scam often involves a 3rd party (shipping agent, business associate owing buyer money, etc)
The fake checks could be:
  • Real checks stolen from a bank or picked up from the garbage when a branch goes out of business and doesn't follow proper document disposal.
  • Copies of checks. However, if you copy a check the watermark 'VOID VOID VOID' should show up.
  • Checks may be from overseas taking longer for them to bounce. common countries currently include: Nigeria, Romania, Ukraine, Spain, UK, Italy, Netherlands - but could be anywhere.
    Sometimes they are just from across the country e.g. from a bank in Florida sent to California.
  • They may be a legitimate check that was just cancelled by the issuer.
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ScamAlert at rentals.com says:

Please be aware of an internet scam that some of our customers have encountered. A potential tenant will overpay you a large sum of money in the form of a cashier's check, and ask for the difference back. Do not send any money; the check is fake. If you have any questions about this or other questionable activities, please call our customer service center at 1-888-501-7368.

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FAQ at VacationsFRBO.com says:
What can I do to protect myself from fraud as either a renter or owner?

The general advice we have for all parties is to try to pay and accept payment via a credit card or PayPal, as these give you some dispute recourse.

Searching Google for "landlord credit checks", for instance, will return multiple websites that charge roughly $10 to $20 for basic information.

Owners and renters should insist on a written contract that is clear and contains the names, addresses and phone numbers of both parties. We recommend proceeding with caution where either party insists on payment via a money order, bank transfer or cashier's check that cannot be verified or traced.

Do not ever accept a cashier's check in excess of the required amount where the "excess funds" are requested to be sent to the payer, as this is a common scam.

And always keep in mind the old adage that if it seems too good to be true, it probably is.

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Overpay Alert Guidelines at: ftc.gov

The FTC gives the following tips to avoid check overpayment scams:

  • - Know who you are dealing with - independently confirm your buyer's name, street address, and telephone number.
  • - Never accept a check for more than your selling price.
  • - Never agree to wire back funds to a buyer - a legitimate buyer will not pressure you to do so, and you have limited recourse if there is a problem with a wire transfer.
  • - Resist pressure to "act now." If the buyer's offer is good now, it should be good when the check clears.
  • - If you accept payment by check, ask for a check drawn on a local bank or a bank with a local branch. You can visit that bank branch to determine if the check is legitimate.
  • - Consider an alternative method of payment, such as an escrow service or online payment service. If the buyer wants to use a service you have not heard of, be sure to check it out to be sure it is reliable - check its Web site, call its customer service hotline, and read its terms of agreement and privacy policy. If you do not feel comfortable with the service, do not use it.
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About/scams at Craigslist

You can sidestep would-be scammers by following these common-sense rules:

  • DEAL LOCALLY WITH FOLKS YOU CAN MEET IN PERSON - follow this one simple rule and you will avoid 99% of the scam attempts on craigslist.
  • NEVER WIRE FUNDS VIA WESTERN UNION, MONEYGRAM or any other wire service - anyone who asks you to do so is a scammer.
  • FAKE CASHIER CHECKS & MONEY ORDERS ARE COMMON, and BANKS WILL CASH THEM AND THEN HOLD YOU RESPONSIBLE when the fake is discovered weeks later.
  • CRAIGSLIST IS NOT INVOLVED IN ANY TRANSACTION, and does not handle payments, guarantee transactions, provide escrow services, or offer "buyer protection" or "seller certification"
  • NEVER GIVE OUT FINANCIAL INFORMATION (bank account number, social security number, eBay/PayPal info, etc.)
  • AVOID DEALS INVOLVING SHIPPING OR ESCROW SERVICES and know that ONLY A SCAMMER WILL "GUARANTEE" YOUR TRANSACTION.

Links:
Reporting links on the Common Scams Page to file a complaint.
Names Used by Nigerian Scam Artists in Money Transfer and Bank Account Frauds - "Nigerian" and "Dutch" Frauds
Name of Scammers and Names used in Nigerian Scams

last updated 16 June 2009