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Trick or treat? It’s what you’ll soon be hearing in neighborhoods across Connecticut, but it’s also what you should be asking yourself when you receive a check from an unfamiliar or unexpected source. While it has been around for years, check fraud has become more common with the ease and anonymity of online communications, and the Better Business Bureau (BBB) has recently issued a new study and initiative. This Cyber Security Awareness Month, we’re taking a look at check fraud scams that originate online and how to stop one in its tracks.

What is check fraud?

Check fraud is orchestrated by scammers who send a counterfeit check, which may be a regular check, cashier’s check, or money order, to an individual or business and ask the recipient to deposit the funds into their own account. The scammers then instruct the recipient to transfer some or all of the funds to another account, wire money, send cash or purchase gift cards. Usually, by the time the fake check bounces, the victim has already transferred the funds or made the purchases as requested and may be responsible for repaying that money to their financial institution.

Who is targeted by check fraud scams?

Since there are many different ways that check fraud scams can be carried out, anyone could be a target, from digital-savvy college students to a seasoned small business owner. And with the increase in credit, debit and online transactions, many people are unfamiliar with check writing as a whole. As the BBB points out in their recent study, “a lack of knowledge can create a target-rich environment for frauds.”

Examples of check fraud scams online

Fraudsters often succeed by concealing their scams under the guise of ordinary transactions, such as purchases on online marketplaces like Craigslist. A scammer will contact a seller and send a check for more than the item’s listed price. The “buyer” then asks the seller to wire the difference, granting the scammer untraceable cash and leaving the victim with a fake check – and down the amount money they wired plus any refund they owe their financial institution.

Another example of scams on the rise today often impact college students who, growing up in a digital-first world, may be less familiar with traditional checks. In these scams, a student may receive an email or find a post online about a job opportunity. As the BBB study reports, mystery shopper scams are one of the most common. Victims receive checks in the mail that they are told to deposit before going to a store or online marketplace to buy the items listed. They are then instructed to wire a portion of the money to their “employer” and keep the remainder as payment. Students believe that they are making quick easy money when in fact they’re sending their own money to scammers.

Other “employment” scams may include emails or texts about caregiver jobs or car wrap advertising. Both result in college students receiving and depositing fraudulent checks before wiring money or sending pin numbers of purchased gift cards to third parties disguised as equipment vendors. Once again, the checks bounce and students lose their own money.

Detecting a check fraud scam

Technology has made generating realistic fraudulent checks much easier for scammers, but there are still signs you can look for. The BBB recommends inspecting a suspicious check carefully, looking for an incorrect routing number, missing digits or mismatched check numbers or sender information. As we discussed in an earlier post about protecting personal information, if you suspect that the check may be fraudulent, do not rely on the contact information provided to you by the sender. Instead, look up the phone number or email address for the company and contact them directly. If you still feel uneasy, alert the local authorities and do not deposit the check.

Staying informed about consumer scams can help you avoid a potentially costly and emotional problem. Before you deposit a suspicious or unexpected check from an unknown source, be sure to take a second look. For more Cyber Security tips, visit our FutureTrack blog.

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