Be Aware of Check Cashing Scams this Christmas

As we all begin to count down the days until Christmas we should also be aware of several types of online scams that see a rise in popularity at this time of year, including check cashing scams which we discuss here.

Check Cashing scams have been around for years and years, pre-dating the Internet by decades. If you’ve ever watched US movie “Catch Me If You Can” which dramatized the life of Frank Abagnale, a famous fraudster who became notorious for cashing fake checks then you will certainly be familiar with the crime.

Scammers know that many people will be looking for extra money during the festive season and thus may be more susceptible to certain crimes that promise to provide some extra cash. Check cashing scams are one such example.

The fundamental aspect of online check cashing scams is the scammer sending a victim a fake check. Upon receipt of the fake check the victim will be instructed to cash the check at the victims bank and then forward either a portion or the entire amount to another person (or back to the sender), usually via a money wire service like Western Union. The scam relies on the fact that when the victim deposits the fake check the bank will not realise immediately that the check is fraudulent and thus the victim is initially unaware that there is a problem.

Because both the bank and the victim are initially unaware that the check is fraudulent, one of two things can happen – either the bank will advance the victim the cash (i.e. allow the victim to withdraw the funds before the check has properly cleared) or the victim will withdraw money from their own existing funds.

The victim then sends the scammer the money as per their instructions and then later find the check has bounced and the money they sent to the scammer has been lost.

That is the fundamental template that nearly all check cashing scams take on, with the only real difference being with what story the scammer baits the victim with, and how they motivate the victim to cash the check and then withdraw and wire the money elsewhere. Here we outline some common examples –

Fake job offers – fake job offers will involve a scammer contacting a victim via spam email or by harvesting their details from a job listings website. The scammer offers the victim a job and will advance their wages to them via a fake check. However the victim will be instructed to forward a portion of that money onto somebody else through a money wire service.

This may be part of the “job”, i.e. the victim is told they are a “payment processor” and are required to forward money because the company they work for does not have access to US based banks. Or the victim may be told that they need to split their wages with other employees.

Variants of these scams are often targeted at Au Pairs, people looking for Mystery Shopping jobs and those looking for payment processing jobs.

We’ve overpaid you – This variant essentially involves a scammer paying for a service or product provided by the victim but will pay the victim too much and will request the extra amount to be withdrawn and wired back the scammer.

Variants of these scams typically target sellers on local listing services like CraigsList and Gumtree, however scammers can potentially target any person who sells products or services on the Internet.

All of these scams will involve a victim being sent a fake check, told to cash it and then being promptly instructed to wire money elsewhere, where unknown to the victim will end up back into the hands of the scammer.

Spotting the scams…

The good news is that check cashing scams are relatively easy to spot once you know they work. In today’s age of PayPal, bank transfers and other legitimate ecommerce transfers, checks have become relatively rare.

This means that Internet users should be sceptical when presented with someone asserting to offer payment via a check. Try and avoid accepting checks from people you do not know and have never met because trying to cash fake checks, even if the check does not belong to you, can potentially lead to trouble with the bank.

Remember that checks can take up to 10 working days to properly clear so you should never withdraw cash from a check payment until you know that the check has cleared correctly.

Also note that job opportunities that are willing to hire you without a formal face-to-face interview and require payments by sending you a check are certainly scams.

Users should also be especially cautious when using money wire services like Western Union which are prolifically used by check cashing scammers. Transferring money through Western Union offers little protection and scammers can take advantage of such services to steal money without leaving a paper trail.

Don’t get scammed this festive period and remember that scammers looking to make a quick buck at your expense will be prolific as Christmas approaches.