2009 PRESS RELEASES

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June 8, 2009
DON’T FALL FOR THE FAKE CHECK SCAM
Contact: Elaine Lidholm, 804.786.7686

If it looks too good to be true, it probably is. There is no legitimate reason why anyone you do not know and trust would send you a check or money order, ask you to cash it and then wire a portion of the money back to them.  The Virginia Department of Agriculture and Consumer Services’ (VDACS) Office of Consumer Affairs (OCA) issued those words of warning about a money scam that is reaching a growing number of unwary citizens. 

This swindle is called the fake check scam. During the period May 2008 to May 2009, OCA received approximately 200 complaints about it.  According to the Consumer Federation of America (CFA), nearly one third of adults in the U. S. have been approached regarding a fake check scam and at least 1.3 million people have actually been victimized.  With an average loss of $3,000 to $4,000 per victim, billions of dollars have gone to fake check scammers by unwitting consumers who have been scammed.

Todd P. Haymore, VDACS Commissioner commented, “Because many people are facing economic challenges today, it’s easy to understand the appeal of an opportunity that claims it will help relieve your financial problems.  Con artists will continue to perpetrate these devastating schemes unless we inform and warn our friends, family and associates about what to look for and what to avoid.”

The fake check scam begins when someone sends you a realistic looking check or money order, asks you to deposit it, make a partial withdrawal and then send back some of the money, usually by money order, cashier's check or even cash.  The scam is that no matter how realistic the check or money order looks, it is almost always a fake.  It may closely resemble the real thing and initially fool even a bank, but when the bank determines that there is no money to back it up, you as depositor are still responsible for any checks you deposit or cash, as well as any checks you write or withdrawals you make. 

Consumers may be fooled, not only by the realistic look of the checks, but also by the fact that they can usually withdraw money shortly after depositing a check.  Consumers may mistakenly think that because the money is available to them, the check has cleared.  In fact, mandated by a law passed in the 1980s, banks are required to make funds available to their customers shortly after a check is deposited even though it may take significantly longer to determine that the check is a fake. .  When that occurs, it is the depositor, not the person who initially provided the check, who must pay the missing funds back to the bank. This is where unsuspecting consumers lose thousands of dollars.

A recent CFA survey showed that the most common fake check scams involve sweepstakes and lotteries, grants and work-at-home opportunities delivered to your door.  Here is how participants are tricked:

• You are notified that you have won a substantial sum in a foreign sweepstakes or have been awarded a grant.  Officials send you a check or money order as an advance on the money you are going to receive but you must send back part of the money to pay taxes and fees.
• You are offered a job by a foreign company which claims it is unable to receive payments from customers.  Your job is to receive the payments, deposit them and then wire the funds back to your company.  You receive a percentage of the payments processed. 
• You are hired as a secret shopper to evaluate a money transfer service.  You are given a check, told to deposit it in your bank account, and then to withdraw the amount in cash.  Next, you are instructed to take the money to the money transfer service that you are evaluating and send the money to someone in Canada.  Then you are to write up your evaluation.

Why do the scam artists want the money wired to them?  When money is wired to a recipient, it is often available to them within minutes.  That means that once the money has been sent, it is practically impossible to stop the payment and retrieve the funds.  In addition, the recipient picks up the wired money in cash so it is very unlikely that it can be traced and returned.

What can you do to avoid becoming the victim of a fake check scam?  OCA offers these suggestions:

• Visit www.fakechecks.org, a Web site created by the National Consumers League as part of CFA’s Fake Check Task Force.  The site offers new information in English and Spanish about grant and mystery shopping scams and an e-card to warn others about fake check scams.
• Don’t ever accept a check, even a cashier’s check, or money order for any kind of payment if the check or money order is for more than the required amount and you are asked to wire back or return some of the funds. 
• Disregard and discard any offer that says you have to pay to receive a prize or gift.  If it’s actually a free prize or gift, you should not have to pay for it.
• Inject a healthy dose of reality into your dealings.  If you are told you have won a sweepstakes or lottery, ask yourself if you ever entered such a contest.  If you are told you have been awarded a grant, realize that grants are usually given to organizations instead of individuals and that they require an extensive application process. 
• If you accept a check as payment, make sure it is drawn for no more than the amount of the transaction.  Also, be sure it is drawn on a local bank so you can make a personal visit to get the bank’s written assurance that the check has cleared before completing the transaction.
• Consider using an escrow service or online payment service, but be sure the one you choose is well known and has an established reputation for honesty and good customer service.  Do not let the other party talk you into using an unfamiliar service.
• If an offer sounds too good to be true, get advice from OCA’s telephone counselors weekdays from 8:15 a.m. to 5 p.m. via the toll-free Consumer Protection Hotline, in Virginia at 800.552.9963 or in the Richmond area at 786.2042.  

One more thing you can do regarding fake check scams is to tell other people about the threat.  Warn your family, co-workers and friends about this fraudulent activity that can rob them of hundreds or even thousands of dollars.  Do it in person or use the e-card at www.fakechecks.org.

If you think you’ve been victimized by fake check fraud, you can report the fraud to your local law enforcement agency, the U.S. Postal Inspection Service at 877.876.2455, or the Federal Trade Commission at 877.382.4357.