We may live in a digital world, but old-fashioned paper cheques are still in use and, for scammers, they present an opportunity to steal your money.
Of the many scams prevalent in today’s society, fake cheque scams target consumers of all ages, and worryingly, they’re on the rise.
In recent years, renewed focus by the banks on identifying fraudulent cheques as they pass through the clearing system has ensured that 95% of all cheque fraud is stopped before a loss occurs. However, many fake cheques still make it through the system and cost unsuspecting consumers in the UK, the US, Canada and Australia millions every year.
With the consequences of falling victim to fake cheque scams potentially so damaging, you must know how to keep yourself safe.
In this guide, we’ll provide you with the latest information on how to spot, avoid and report fake cheque scams to help you get one up on the scammers.
What is a Fake Cheque Scam?
There are many variations of the fake cheque scam, but they all rely on the same simple mechanics.
A person or organisation you don’t know will send you a cheque, often for thousands of pounds, and ask you to immediately wire some of the money back to them or another party. However, the cheque you deposit into your bank account is counterfeit, so the funds you transfer to the other person are your own. The fake cheque then bounces, and you are left out of pocket.
The fraudster will either make an overpayment by cheque or ask you to send money to a third party. They will always explain why you can’t keep the full value of the cheque, and it’ll usually be quite convincing.
They might tell you they need you to send the money to cover handling costs or taxes or buy supplies on their behalf. But whatever the explanation, the requirement to send money to another account is the telltale sign of a fake cheque scam.
The Council of Better Business Bureaus has compiled a list of the most ‘risky’ scams, based on how likely people are to be targeted, how likely they are to lose money and how much they’ll typically lose, and the fake cheque scam comes in second place.
If You’ve Been Targeted by a Fake Check Scammer, Report it to:
Examples of Common Fake Cheque Scams
There are numerous examples of fake cheque scams that you should look out for. One of the most well-known examples of a fake cheque scam is the offer of a reward for agreeing to allow money to be transferred from a foreign country to your bank account for safekeeping. However, there are also plenty of other ‘pitches’ to look out for:
Overpayments
Scammers buy items that you’ve advertised online or in the classified ads of newspapers or magazines and ‘accidentally’ pay you too much money by cheque. They then ask you to refund the difference, only for their cheque to bounce.
Claiming Prizes
Scammers buy items you’ve advertised online or in the classified ads of newspapers or magazines and ‘accidentally’ pay you too much money by cheque. They then ask you to refund the difference, only for their cheque to bounce.
Mystery Shopping
Scammers buy items that you’ve advertised online or in the classified ads of newspapers or magazines and ‘accidentally’ pay you too much money by cheque. They then ask you to refund the difference, only for their cheque to bounce.
Personal Assistants
Scammers buy items you’ve advertised online or in the classified ads of newspapers or magazines and ‘accidentally’ pay you too much money by cheque. They then ask you to refund the difference, only for their cheque to bounce.
Unexpected Cheques
Scammers buy items you’ve advertised online or in the classified ads of newspapers or magazines and ‘accidentally’ pay you too much money by cheque. They then ask you to refund the difference, only for their cheque to bounce.
Adding Extra Names in the Payee Line
Scammers buy items you’ve advertised online or in the classified ads of newspapers or magazines and ‘accidentally’ pay you too much money by cheque. They then ask you to refund the difference, only for their cheque to bounce.
How do Fake Cheque Scams Work?
This scam takes advantage of the time it takes for banks to identify fake cheques, which can take weeks.
Although the funds from a cheque will appear in your account within a few days, that doesn’t mean it’s a good cheque. The bank may say the cheque has ‘cleared’, but it’s still working its way through the system.
The fraudster will ask you to pay back to them or onto another account after a couple of days of receiving the cheque, which will show the funds in your account. When the cheque bounces, the bank will remove the money from your account, leaving you out of pocket.
The question is, if it’s a fake cheque, then why does the money show in your account? This is the crux of the whole scam. Banks must make deposited funds available for withdrawal within days – it’s the law.
Although the banks do everything they can to stop fraudulent or counterfeit cheques in the clearing process, you will not know that the cheque will bounce until after six working days. By that point, the scammer has your money, and you must repay the bank.
How to Avoid a Fake Cheque Scam
There are a number of simple rules that can help you steer clear of this scam:
Did someone you don’t know send you a cheque in the post?
It’s a scam!
Has someone sent you a cheque for more than the sale price of an item you’re selling online?
It’s a scam!
Have you been paid by cheque, and the payer is asking you to make payments or send money back to them?
It’s a scam!
Have you been hired as a secret shopper and are told to transfer back?
It’s a scam!
Have you won a financial price and been asked to make a payment to cover taxes and fees
It’s a scam!
Our advice is:
- Don’t accept cheques as a method of payment unless you know and trust the person you’re dealing with. With so many other forms of payment these days, there’s always a safer alternative.
- Never agree to send money back to someone who has paid you by cheque.
- Never accept a cheque for more than the sale price of an item.
- Never hand over goods that you are selling until you’re certain the funds will not be reclaimed (six working days after the cheque has been paid into your account). If the buyer has a problem with that, ask them for another form of payment.
- Always use a secure online payment service when selling online.
Who are the Victims of Fake Cheque Scams?
Fraud involving fake cheques has mushroomed in recent years and has been described as an ‘exploding epidemic’ in a report by the Council of Better Business Bureaus.
Financial scammers typically target older people who are less accustomed to using digital technology in their day-to-day lives and cannot always spot the telltale signs of a scam. However, as well as consistently ranking as one of the most common scams for seniors, many of the victims of this form of financial trickery are also in their 20s.
Young adults do not have the experience of writing cheques and are not as familiar with how they work. In fact, a study has found that a third of Generation Z, whose oldest members are in their mid-20s, have never used a paper cheque.
Cheque scams also commonly use offers of employment to lure unsuspecting victims, which is something young adults may find particularly attractive. The result is that people in their 20s are more than twice as likely as those over 30 to lose money to these scams.
Fraud involving fake cheques has mushroomed in recent years and has been described as an ‘exploding epidemic’ in a report by the Council of Better Business Bureaus. Financial scammers typically target older people who are less accustomed to using digital technology in their day-to-day lives and cannot always spot the telltale signs of a scam. However, as well as consistently ranking as one of the most common scams for seniors, many of the victims of this form of financial trickery are also in their 20s.
Why are Fake Cheques so Difficult to Spot?
Fake cheque scams are so effective because many of the cheques the scammers use are identical to the real deal, even to bank employees. They can feature the names and addresses of legitimate financial institutions and be printed on special cheque paper. In some cases, the scammers even use actual cheques from bank accounts that belong to identity theft victims.
A focus by banks on identifying fraudulent Cheques as they pass through the clearing system now means that £9.50 of every £10 of attempted cheque fraud is prevented before a loss occurs. However, huge losses are still being incurred, with some cheques taking weeks before they are identified as fake.
Who is Liable for The Losses Resulting From Fake Cheque Scams?
By law, you are responsible for ensuring the cheques you deposit are the real deal. That’s because you’re the one who is dealing directly with the individual or company that’s making the payment, so the law says that you’re in the best position to assess the risks.
If you are the recipient of a fake cheque that bounces, banks will consider the circumstances of the case. Generally, the bank is liable if it accepts a cheque that has been altered, forged or improperly endorsed.
However, if the bank can prove that it exercised due care and diligence in handling the transaction and that it accepted the cheque in good faith, and that your actions – the way the cheque was handled, issued or made payable – contributed to the scam, the liability may fall on you.
In that case, the bank will deduct the amount that was originally credited to your account. If there is not enough money in the account to recover the cheque amount, the bank can access other accounts you have with it to recoup the funds. If you do not hold any other accounts with the bank, the bank could sue you.
How Can You Tell a Real Cheque From a Fake Cheque?
Given that the banks are passing the responsibility for identifying fake cheques, it certainly helps if you know a few warning signs to look out for.
How Can you Protect Yourself from Fake Cheque Scams?
You can take several steps to reduce the risks of falling victim to a fake cheque scam.
Firstly, you should never cash an unexpected cheque. As with all online scams, it almost always is if something sounds too good to be true. An individual or business you have never heard of before will not send you a cheque in the post without a serious catch. Do not cash it unless you know and trust the company or individual and are expecting the cheque.
Legitimate businesses also rarely communicate with customers through social media, messaging apps or personal email accounts such as Gmail or Hotmail.
If you are contacted through a company email address, search for the email address in Google and see if it takes you to a legitimate website, or just give the company a call. However, do not use any telephone number that appears on the cheque. Instead, search for the company’s contact details online.
No legitimate individual or company will ever overpay you and ask you to transfer money back. That is the hallmark of a fake cheque scam. Scammers will also apply pressure or incentivise you to act quickly. It can take 10 days or more for your bank to determine that a cheque is counterfeit, so do not transfer or spend any of the funds during that time.
Top Tips for Writing Safe Cheques
One of the most common ways that scammers commit cheque fraud is by altering the details on cheques that you’ve written. They typically do that by getting their hands on legitimate cheques and altering the payee details or changing the amount payable. That’s why, if you have been sent a cheque and not received it, or sent a cheque that hasn’t been received by the individual or company it was meant for, you should get in touch with your bank or the organisation that sent the cheque immediately.
When writing a cheque, you should:
What Happens if you Accidentally Deposit a Fake Cheque?
If you deposit a fake cheque and the bank can prove that it acted in good faith and that you were negligent in your obligation to ensure the cheque was real, you will be financially responsible for any losses you incur. Not only will you have to repay the bank any of the money that you’ve transferred to other accounts or spent, but you’ll also be liable to pay any overdraft charges, processing fees or other costs you might have incurred.
If the bank thinks that it was an honest mistake, your lack of knowledge will usually serve as a defence against criminal charges. However, your bank may request that you file a police report and make a note of the fake cheque on your account.
Can I go to Jail for Cashing a Fake Cheque?
If the bank thinks you knowingly deposited a cheque that has been forged or faked, you could be subject to criminal charges with penalties that include fines and even jail time. The severity of the punishment will usually depend on the amount of money involved.
What should you do if you’ve sent money to a scammer?
If you believe you’re the victim of a fake cheque scam and have already sent money to a scammer, the reality is that in most cases, it’s already too late. However, if you act quickly, then depending on the type of scam, there may be a small chance that you can get your money back.
You’ve paid money to a scammer via a gift card
Gift cards should never be used as a method of making a payment. If you are asked by anyone to make a payment this way, it is always a scam. If you’ve already bought a gift card for a scammer and sent them the PIN code, you should contact the company that issued the card immediately to ask them to cancel the card and explain that it was used in a scam.
You’ve transferred money to a scammer
It’s common for fake cheque scammers to ask for overpayments to be returned to them or payments for shipping, taxes and handling charges to be made using an online money transfer service such as Western Union or MoneyGram.
If you have sent money in this way, call the cancellations and refunds department at the transfer provider immediately and ask for the transfer to be reversed. It’s not usually possible to refund a transaction once it has been paid out, so you must contact the transfer provider as quickly as possible.
You’ve sent money to a scammer via a money order
If you have paid money to a scammer via a money order, then once again, time is of the essence. You should contact the company that issued the mail order immediately to try and stop the payment. If that’s not successful, contact the delivery service you used or Royal Mail, US Mail, etc. to prevent the money order from being delivered.
Where Should You Report Fake Cheque Scams?
Fraud involving fake cheques has mushroomed in recent years and has been described as an ‘exploding epidemic’ in a report by the Council of Better Business Bureaus. Financial scammers typically target older people who are less accustomed to using digital technology in their day-to-day lives and cannot always spot the telltale signs of a scam. However, as well as consistently ranking as one of the most common scams for seniors, many of the victims of this form of financial trickery are also in their 20s.
These are the organisations you should report the scam to:
You should report most fake cheque scams to Action Fraud.
If the scam is in progress, occurred in the last 24 or you need immediate police assistance to recover large amounts of money transferred from a bank account before it can be transferred away, call 999.
If you receive a fraudulent cheque in the mail, then as well as reporting it to Action Fraud, you should forward the papers back to Royal Mail at the following address with a covering letter explaining what has happened:
Freepost Scam Mail, PO Box 797, Exeter EX1 9UN
If you’ve been targeted by a fake cheque scam in the US, report it to the following organisations using the links provided:
If you think you have been the victim of fake cheque fraud, you should contact:
- The local police – File a report about the scam and get a report number that you can use for future reference
Canadian Anti-Fraud Centre – You should report the scam even if you didn’t lose any money.
If you think you have been scammed, report it to the Australian Competition and Consumer Commission (ACCC) using this form.
You should also report this type of scam to the bank or financial institution involved and ReportCyber.
If your complaint and the supporting information supports the finding that a criminal offence has been committed, the matter will be referred to the police for investigation.
What Should You Do If You’re The Victim Of A Fake Cheque Scam?
Fraud involving fake cheques has mushroomed in recent years and has been described as an ‘exploding epidemic’ in a report by the Council of Better Business Bureaus. Financial scammers typically target older people who are less accustomed to using digital technology in their day-to-day lives and cannot always spot the telltale signs of a scam. However, as well as consistently ranking as one of the most common scams for seniors, many of the victims of this form of financial trickery are also in their 20s.
These are the other steps you should take to reduce the risk of losing more money and avoid being scammed again:
- Stop communicating with the fraudster or scammer
- Notify your bank that you have been the victim of a fake cheque scam
- Gather together all the evidence you have of the scam so it can be passed onto the investigating agencies as required. That includes correspondence, any contact details for the scammer, receipts and financial statements, plus receipts from money transfer services, gift cards or money order services.
- Do not handle documents you have been that the scammer may have touched and protect them with a plastic cover
- Do not make any major financial decisions until you know your position and what you could be liable for
- Change the passwords to your online banking, social media sites, email and any other accounts that may have been affected
- Document your dealings with law enforcement and your bank
Please Take Steps To Protect Yourself
Fraud involving fake cheques has mushroomed in recent years and has been described as an ‘exploding epidemic’ in a report by the Council of Better Business Bureaus. Financial scammers typically target older people who are less accustomed to using digital technology in their day-to-day lives and cannot always spot the telltale signs of a scam. However, as well as consistently ranking as one of the most common scams for seniors, many of the victims of this form of financial trickery are also in their 20s.