How Bank Fraud Works
How to Recognize Bank Account Fraud
Types of Scams
Government Grant Scam
Sales and Service Scams
How to Protect Against Bank Account Fraud
Fraud Prevention Tips
Generally, someone you don’t know approaches you with an opportunity to cash a check or deposit the funds into your bank account and then requests you to use a portion of that money for what appears to be a legitimate purpose. Scammers count on you to believe that once you deposit or cash the check, you can hand over or wire a portion of the total without any concern because the check has “cleared” and therefore cannot be returned unpaid and the scammers check is a fake!
When you cash or deposit any check, your bank forwards that check to the bank on which the check was written for payment. For most checks, payment occurs without a problem. However, if the paying bank discovers that a check is fraudulent, it will return the check to your bank without paying it. Your bank will then withdraw from your account the amount that was originally credited when you first deposited or cashed the check. It can take a period of time – even weeks– for a check to be discovered as fraudulent and returned to your bank. But, once it is returned, you are responsible for repaying the full amount of the original check and any related fees if your account went into overdraft when the check was returned
How to Recognize
Bank Account Fraud
A scammer’s goal is to distract you from taking the time to consider whether or not his check, money order, postal order or other item is real. The fraudster accomplishes this by offering you something believable enough to tempt you into immediately giving away money from your account before that check can be returned by the paying bank as fraudulent.
There are many variations of bank account fraud. These scams frequently target individuals who are looking for work opportunities, selling items, targeting the elderly or simply seeking to help someone in need. Be alert and familiarize yourself with the most common scams so that you can easily spot attempts to commit bank account fraud.
Types of Scams:
Description of Scam: Congratulations – you’ve just won a foreign lottery. You receive a letter with a large-dollar check that you are asked to deposit into your personal checking account. However, you need to immediately wire a portion of the funds to a foreign account to cover various taxes and administrative fees.
government grant scam
Description of Scam: A phone call from a “government agency” congratulates you on being awarded a free grant for paying your taxes on time. The caller asks for your checking account number so that the grant can be deposited and “one-time processing fees” automatically withdrawn.
Online Romance / Dating / Friendship Scam
Description of Scam: A participant in an international online dating site begins communicating with you via Instant Messaging (IM). In the course of discussion, he mentions some personal financial difficulties that would be solved if he could just find a way to cash a U.S. check that he has been unable to cash. The fraudster asks if you would wire the funds to an account where he can pick up the cash? The fraudster states the endorsed check will be mailed to you to deposit.
A Stranger in need
Description of Scam: Someone you don’t know well or just recently met tells you that he/she doesn’t have a bank account and the bank won’t cash her check. Could you deposit the check into your account and give her the cash? The individual will give you $20 from the check for your help.
Tips: Always be suspicious of anyone who needs you to cash a check immediately on his or her behalf. Remember that you will ultimately be responsible for the full amount of the check if it is returned unpaid by the bank on which it was written.
Work at Home / Work out of the Home Scam
Description of Scam: You respond to an email with a work-at-home employment offer. The employer sends a check with your first month’s salary and money to purchase the supplies you will need to complete the work. The employer asks you to deposit your paycheck but wire a portion of this first check to another account to cover the cost of your “one-time certification” and the training materials that will arrive in the coming weeks.
Mystery Shopping Scam
Description of Scam: You answer an advertisement about an opportunity to earn money by being a mystery shopper (anonymously visiting businesses to evaluate their services). In a few days, you receive a package containing instructions and evaluation forms for your first mystery shopping assignment. You also receive a check that includes both your salary and the cash you will use in your mystery shopping assignment. You are instructed to deposit the check to your personal account and withdraw several hundred dollars to take to the local office of a well-known money transfer service. You are asked to wire this money to another bank account so that you can evaluate the office’s customer service and/or quality of services for that particular company.
sales and service scams
Description of Scam: You are selling an item via an online auction. The winning bidder mails a cashier’s check for more than the final sales amount. The buyer indicates that this was a simple mistake. He/she asks you to go ahead and deposit the full amount but wire him the difference.
Description of Scam: You receive a telephone call from what seems to be a legitimate company. There are problems with your account and the company simply needs to verify some information. The caller seems to already have information about you so you feel comfortable sharing additional information, such as your account number, to help the company correct the problems.
How to Protect Against
The best defense against bank account fraud is simple awareness and common sense. Some important points to keep in mind:
Remember that a wire transfer is an immediate form of payment that can outpace the amount of time it takes to determine that a check is fraudulent. Once a scammer has picked up funds that you have wired in exchange for a check, the wire transfer cannot be reversed, even if fraud is involved;
Never try to lead on a scammer with the intention of “catching” them or getting back at them. You may unintentionally provide the scammer with additional information that can be used to defraud you.
Fraud Prevention Tips:
Look for typos, discrepancies in how the banking website looks, and misspellings on checks and other documentation – they are red flags for potential fraud.