An in-depth study by the Better Business Bureau (BBB) finds that, while consumers may write fewer cheques in this era of electronic financial transactions, fake cheque scams are on the rise.
Fake cheques are used in a variety of frauds, from employment scams to prize and sweepstakes fraud. In all cases, victims deposit the cheque and send money back to scammers. BBB warns consumers to be on guard against these serious and pervasive frauds and their perpetrators.
Am investigative study—“Don’t Cash That Cheque: Better Business Bureau Study Shows How Fake Cheque Scams Bait Consumers” (https://go.bbb.org/2wKzyAL)—looks at how fake cheques dupe consumers. It digs into the scope of the problem, who is behind it, and the need for law enforcement and consumer education to address the issue.
Scammers often succeed because consumers don’t realize that crediting a bank account does not mean the cashed cheque is valid. Banking rules require that when someone deposits a cheque into an account, the bank must make the funds available right away—within a day or two.
Even when a cheque is credited to an account, however, it does not mean the cheque is good. A week or so later, if the cheque bounces, the bank will want the money back. Consumers, not the fraudsters, will be on the hook for the funds.
Consumers also do not realize that cashier’s cheques and postal money orders can be forged. A cashier’s cheque is a cheque guaranteed by a bank, drawn on the bank’s own funds and signed by a cashier. If a person deposits a cashier’s cheque, the person’s bank must credit the account by the next day.
The same holds true for postal money orders. Scammers use cashier’s cheques and postal money orders because many people don’t realize they can be forged.
Fake cheque fraud is a huge problem, with complaints to regulatory agencies and consumer watchdog groups doubling over the last three years. Fraud employing fake checques is rapidly growing, and costing billions of dollars. Fake cheques were involved in seven per cent of all complaints filed with BBB’s Scam Tracker.
Based on complaint data trends, the study suggests that there may hav been more than 500,000 victims of counterfeit cheques in 2017. The study found that the fraud affects victims of all ages and income levels, but consumers between the ages of 20 and 29 reported being victimized by the scam more than consumers of any other age range.
“Consumers need to remember that banks credit consumer accounts before verifying that cheques are valid,” says Evan Kelly, senior communications advisor for BBB serving Mainland BC. “Many fake cheques show up in age-old scams such as employment or overpayment scams. In Canada we know about roughly 2,000 reports from last year, but that is a low estimate, as only five per cent of victims actually come forward.”
Nigerian gangs appear to be behind most of this fraud, often using romance fraud victims and other “money mules” to receive money from victims. Many fake cheques and money orders are shipped to the U.S. and Canada from Nigeria.
Most cheques have security features, which include micro-printing on the signature line, and elsewhere on the cheque; a security screen on the back of the cheque; the words “Original Document” on the back of the cheque; and high-quality paper that contains watermarks of the issuing institution.
Also look for any smudges or discoloration, which indicate that the cheque was altered, and make sure that personal details match up. If you find you have deposited a fake cheque into your account, immediately notify your bank and the bank that appears to have issued the cheque.