Fake Check Scams:
How to Protect and Help the Consumers You Serve
Consumer
Federation
of America
2010
How Fake Check Scams Work
• Victim is convinced by fraudster to accept a
realistic-looking check or money order and deposit
or cash it
• Fraudster instructs the victim to wire a portion of
the funds somewhere
• Funds can’t be recalled once picked up
• Scam takes advantage of consumer’s ability to
access funds before counterfeit is discovered
• Consumer is liable for loss, but financial institution
may lose money if consumer unable to repay
• Losses generally range from $3,000 - $4,000
Types of Fake Check Scams
• Work-At-Home
– Victim “hired” to process payments from U.S.
customers for a foreign company
– Receives checks or money orders, sends money
to “employer” minus % as salary/commission
Or
– Victim “hired” to conduct “mystery shopping”
– Receives check or money order, instructed to
make a small purchase or test a money transfer
Types of Fake Check Scams
• Foreign Business Offers
– Scammer claims to be business person or
government official/dignitary of a foreign country
– Offers to make victim partner in lucrative
business deal
– Victim receives check or money order, instructed
to send money to pay legal or other fees
• Bogus Grants
– Scammer claims victim selected to receive grant,
sends check or money order for part
– Victim instructed to send money for processing
or other fees
Types of Fake Check Scams
• Sudden Riches
– Scammer claims that victim has won lottery or
sweepstakes
– Victim receives check or money order as
advance, instructed to send money for “fees” and
“taxes”
• Sweetheart Scams
– Fraudster poses as a romantic interest online
– After rapport is built, scammer asks victim to
cash checks or money orders
Types of Fake Check Scams
• Overpayments
– Scammer claims to want to buy item victim is
selling in print, online classifieds or auction
– Victim receives check or money order for more
than selling price
– Victim instructed to send excess funds to
someone for “shipping” or other reasons
• Rental Schemes
– Concept similar to overpayments
– May target hotels and inns for extended stays
Victims of Fake Check Scams
• ANYONE can be victim
• A pitch to lure every type of person
– Person who is unemployed or wants to make
extra money working at home
– Retiree thrilled to win sweepstakes or get grant
– Someone selling a car or offering a sublet online
– Business person attracted to promise of lucrative
deal
– Trusting person willing to help a new “friend”
• Fake check scams are equal opportunity crime!
The Perpetrators
• Most fake check scammers located in foreign
countries
• Often part of large, close-knit immigrant
communities
• Operate in small groups or “cells”
• Use similar techniques, wording in letters and
emails
• Use false IDs to make it harder to identify and
track them
• Take advantage of difficulty pursuing law
enforcement actions across borders
Counterfeits are Easy to Produce
• Increased availability of resources
– Print shops or software programs
– Materials
• Check stock
• MICR Ink
• Versatile counterfeiting options
– Business or personal checks
– Cashier’s Checks or Official Checks
– Money Orders
– Traveler’s Checks or Gift Checks
Counterfeits may be Hard to Detect
• Quality has substantially improved – it is difficult to
detect counterfeits simply by looking at them
• Names of real companies or individuals often used
in order to make them look legitimate
• Valid account number or routing number not
sufficient to verify item
• Telephone number printed on item may be
scammer’s
Verifying Checks and Money Orders
To verify authenticity, call the maker
• Use phone books, directory assistance, or
Internet to find valid phone number
• Speak to someone in accounting department
But be aware of limitations
• Verifying account exists and sufficient funds
not enough if stolen account # used
• Scammers may use authentic checks/money
orders and counterfeit repeatedly
• Maker may be reluctant to provide information
because of privacy concerns
Verification Resources
Certain types of checks and money orders can be
verified by contacting the issuers:
• American Express Travelers and Gift Cheques
• Visa Travelers Cheques
• MoneyGram money orders
• Western Union money orders
• Postal money orders
• U.S. Treasury checks
Item Processing
Consumers Don’t Understand the
Process
How long does it take a check or money order
to clear?
The teller said that the
funds are available –
that means that the
check or money order
has cleared, right?
NO!
It can take 10 days or
longer for it to “clear”–
but under Reg CC, the
funds must be made
available quickly
How Money is Sent to the Scammers
• Scammers instruct victims to cash or deposit
checks, send funds via money transfer services
• Western Union, MoneyGram are largest, have
the most physical locations worldwide
• Money can be sent and received through agent
locations
• Cash required to send funds from agent
locations, debit cards sometimes also accepted
• Credit, debit cards may be used to send funds
by telephone or online
• In most cases, recipients receive funds in cash
To Receive:
To Send:
Sending & Receiving a Money Transfer
Go to agent
location, fill
out send
form
Provide form,
money and ID
to agent
Go to agent,
fill out
receive form
Present form
and ID to
agent
Agent verifies
ID
Agent verifies
ID
Agent enters
send form into
system
Agent locates
transfer from
info on form
Sender
receives
receipt and
copy of form
Payee
receives
money
Western Union Transaction Process
• Cash required (debit cards OK at some U.S. locations)
• Amount may be limited by laws in send and pay countries
• Sender ID required for amounts of $1000 or more USD,
country laws may apply
• Payee must present ID for payment
• ID requirements: current, government-issued photo ID
• If payee does not have ID, test question may be allowed
for transactions under certain $ limits depending on country
law where payment is received and WU policy
• If destination is U.S., payee can pick up at any WU location
in expected pay state or adjacent state
• If sent to Canada or other country outside U.S., payee can
pick up at any WU location in that country
• In some U.S. and foreign locations, money transfer control
# required to pick up funds
MoneyGram Transaction Process
• Cash required
• Amount may be limited by laws in send and pay
country
• Sender ID required for amounts of $900 or more
USD, country laws may apply
• Payee must present ID for payment
• ID requirements: current drivers license, state ID,
passport, military identification and/or alien ID
• If payee does not have ID, test question allowed
for transactions less than $900 USD, country
laws may apply
• Payee can pick up at any MoneyGram location in
destination country or state (bordering state).
Impact of Fake Check Scams
• Amount of returned item debited from victim’s
account
• May cause overdraft, payments from account to
bounce, fees
• Account may be frozen or closed
• May result in negative report about victim to
databases for account abuses
• If victim unable to cover loss, financial institution
may try other legal means to collect, but not always
successful
• Some victims charged with check fraud
Responding to Consumers
• Direct contact or indirect through social service
agency, financial institution, family or others
• Typical questions
– Is this a scam? May not be victim yet
– I lost money, can you help me?
• Speak directly to consumer if possible, get facts,
determine if fake check scam
• Has consumer already sent the money?
Responding to Consumers
If consumer has not sent money:
• Explain basics of how fake check scams work
• Refer to www.fakechecks.org, provide educational
materials
• If check or money order already deposited or
cashed, provide advice on dealing with situation
• Complaint can provide victim with needed
documentation
Responding to Consumers
If consumer has sent money:
• Suggest they contact money transfer service
immediately
• If you take complaint, explain what to expect
• Encourage consumer to be on lookout for similar
scams, warn others
• Suggest consumer provide documentation to
financial institution, ask to file fraud affidavit
Responding to Consumers
Other places to refer consumers:
• Local postal inspector if check or money order
sent by mail
•Private courier if check or money order delivered
by courier.
• Complaint form for National Consumers League’s
Fraud Center
• Federal Trade Commission
• Internet Crime Complaint Center if solicitation
made online
• PhoneBusters if money sent to Canada
• State Attorney General’s office, other state and
local agencies as appropriate
Resources for Law Enforcement
• Information about registration of scam Web sites
www.samspade.org
• Server IP address and location
http://whoisdomaintools.com
• Information about registration of toll-free numbers
amer.bis.sms800.sms800HD@sykes.com
• Help with scammers located in Canada
PhoneBusters, 888-495-8501(public number)
Corporal Louis Robertson
lrobertson@phonebusters.com (nonpublic)
Resources for Law Enforcement
• FinCrime
www.fincrime.com
• FTC Consumer Sentinel
https://register.consumersentinel.gov/
• Postal Inspection Service
877-876-2455
• National Consumers League’s Fraud Center
www.fraud.org
• Internet Crime Complaint Center (IC3)
www.ic3.gov
Western Union Record Search Requests
U.S. subpoenas
Custodian of Records
Western Union Financial Services, Inc.
20 Corporate Hills Drive
St. Charles, MO 63301
Tel: 636-866-0714
Canadian production orders and warrants
Western Union Canada
c/o Alan Aucoin, Esq.
Blake, Cassels & Graydon, LLP
199 Bay Street, Suite 2800
Commerce Court West
Toronto, Ontario M5L 1A9 Canada
Tel: 416-863-2635
International requests
Must be submitted through Network Agent(s)
MoneyGram Subpoena Contact Information
U.S. subpoenas
Mail original subpoena to:
MoneyGram International, Inc.
Attn: Custodian of Records
1550 Utica Ave South M.S. GO2-1508
Minneapolis, MN 55416
Faxes to 763-549-7349 permitted, but original subpoena must
still be mailed to address above
Information will not be released until original subpoena
received
MoneyGram Subpoena Contact Information
UK requests
May be sent via email to:
UKpolicerequests@moneygram.com
or fax to (44) 207-089-5414
Other international requests (other countries outside U.S.)
Same address or fax number as for U.S. requests or by
email to SUBPOENA@MoneyGram.com
Only UK and other international requests allowed via fax or
email without required mailed or hand delivered copy
Educate your Community
Include fake check scams in:
• Presentations to consumers, businesses
• Public service announcements, press interviews
• Neighborhood alert systems, other
communication channels in community
Partner with banks, credit unions, check cashing
services
• OH AG’s office supplies fake check flyers to
banks, credit unions in state
• Tellers hand to consumers when they make
deposits, withdrawals over certain amount
Educate Businesses
• Warn business customers that names may be used
by fraudsters
• Recommend services such as positive pay
• Enlist businesses to help educate consumers in
community
• Partner in joint consumer education projects,
programs
• Educate businesses about risks of cashing checks
and money orders, how to verify
Educational Resources
Consumer Federation of America
www.consumerfed.org/other/FakeCheckScams.asp
National Consumers League
www.fakechecks.org
PhoneBusters
www.phonebusters.com/english/index.html
FBI Fraud Alert
http://columbia.fbi.gov/fraudletter.htm
Educational Resources
Fraud Alert: Fake Check Scams
American Bankers Association/NCL brochure
www.bankstuffers.com/brochures.php
Giving the Bounce to Counterfeit Check Scams
Federal Trade Commission
www.ftc.gov/bcp/edu/pubs/consumer/credit/cre40.shtm
Don’t be the Victim of a Fake Check Scam!
Postal Inspection Service
www.usps.com/cpim/ftp/notices/not174.pdf