Check Deposit Scams: Are You Liable for a Bad Check? (2024)

How Do Check Deposit Scams Work?

When a woman from Palos Hills deposited a $4,700 check for a stranger, she thought she would make an easy profit [*]. She bought eight gift cards and sent images of each one to a cell number that the stranger provided.

But five days later, the woman received a call from her bank — the check was fake, and her account was $4,000 in arrears. The stranger was long gone, and the woman was a disconsolate debtor.

Criminals run check deposit scams by creating counterfeit documents that resemble personal checks, business checks, cashier’s checks, or money orders.

People between the ages of 20 and 29 comprise 21% of victims — as the most obliging targets in this bracket often include university students, graduates, and young parents who are strapped for cash [*]. Check deposit scams could leave you reeling in the aftermath of mounting debt, a damaged credit report, and even legal trouble.

Types of Check Deposit Scams

  1. Overpayment scams
  2. Fake stimulus checks
  3. Mystery shopper scams
  4. Work from home scams
  5. Lottery and sweepstakes scams
  6. Car wrap scams
  7. Nanny or caregiver scams
  8. Small business fraud
  9. Remote deposit capture scams

Check deposit scams are effective schemes because most victims are enamored by what seems like an opportunity to make easy money. Con artists have perfected these scams and can use technology to create impressive fake checks that look legitimate.

Here’s how a check deposit scam plays out:

  • Scammers contact victims through emails, social media, or bogus job advertisem*nts.
  • After painstakingly building trust with the victim, the scammer sends a counterfeit check that appears to be from a reputable financial institution.
  • The scammer convinces victims to deposit the checks into their own checking accounts, with promises that the victims will be able to keep a percentage of the money.
  • Soon after depositing the check, the scammer urges the victim to forward a large portion of the deposited amount to a separate bank account or credit union.
  • Once the bank realizes that the check is counterfeit, the deposit is reversed. The authorities will hold the depositor responsible for repaying the amount of the check.

Most checks take two business days to clear, but the funds may become available to you immediately [*]. Fake check scams only work if you trust that the check is bonafide and, ultimately, if you send the money before the check bounces.

1. Overpayment scams

The premise of all check deposit scams is an overpayment scam. These schemes are common on social media marketplaces, where criminals send checks for a product only to claim that they mistakenly sent too much. The scammers then pressure their victim to return the excess amount.

Little did Ontario art student Brandon Baghaee know that he was being set up for a similar scam when a woman contacted him on Instagram. Baghaee lost $800 after the woman sent a check for a portrait before claiming that she had overpaid [*].

Warning signs:

  • The buyer refuses to send a new check with the correct amount. If you tell the sender that you will return the first check, but they insist that you cash it and return the difference, it's a scam.
  • The buyer is in a hurry. Another warning sign of check deposit scams is when the sender badgers you into returning the money.

⛳️ Related: How To Check If Someone Opened an Account In Your Name

2. Fake stimulus checks

Scammers send fake stimulus checks to people waiting for benefit payments from the Internal Revenue Service (IRS). In March 2023, tax experts warned the public about scam phone calls that offered taxpayers the chance to claim a "missing stimulus payment" on their 2022 taxes [*].

Warning signs:

  • The IRS does not initiate text messages or phone calls — the real IRS will send a letter.
  • The caller talks about "stimulus checks," whereas the IRS uses the official term "economic impact payment."
  • The IRS rarely overpays taxpayers; beware of anyone who requests that you return part of a supposed overpayment.

3. Mystery shopper scams

In this type of fraud, scammers impersonate legitimate market research firms that recruit shoppers who evaluate retailers, hotels, or restaurants incognito.

As mystery shopping businesses are covert in nature, this scam can easily deceive its targets.

For example, when May Murphy received an email offer and a $2,879 check for a new job as a secret shopper, she assumed it was from her school's career services department [*].

The Rhode Island student soon discovered that it was a fake check when her attempts to cash the check were denied.

Warning signs:

  • Unsolicited emails or messages that offer you mystery shopper jobs that you never applied for.
  • Someone asks you to deposit the money into your own bank account before making transfers.
  • Someone asks you to buy money orders and send them to a supervisor or a different company.

⛳️ Related: Someone Wants To Buy My Car Without Seeing It

4. Work from home scams

Fraudsters pose as recruiters, post job ads, and convince new hires that they will receive checks to cover expenses for home office supplies.

A similar fate awaited Miranda Owens, who believed that she had secured a new remote job [*]. Her fake prospective employer first attempted to have Miranda make a money transfer through Zelle.

When that didn’t work, the scammer successfully had Miranda send $4,500 in Bitcoins to an office supplies company.

Warning signs:

  • Beware of job offers that seem too good to be true. Legitimate recruiters will not perversely hire without proper interviews or background checks.
  • If you can’t find an official website or any reviews online that confirm the legitimacy of the company or recruiter, that’s another red flag.
  • Yet another glaring sign could be your new employer asking you to return a part of your first paycheck to cover “expenses.”

5. Lottery and sweepstakes scams

These check deposit scams begin with a letter or email claiming that you’ve won a prize. While the communication may appear to be from a recognized organization, sweepstakes scams seek to defraud victims by sending bogus checks “to cover taxes and fees.”

In October 2022, a Jamaican national was sentenced to three years in federal prison for his role in a lottery scam that targeted elderly Americans [*]. Greg Warren Clarke induced his victims into paying non-existent taxes and fees to claim a made-up $1 million lottery win.

Warning signs:

  • Unsolicited contact about winning a lottery or sweepstakes. Remember that you cannot win a lottery or sweepstakes if you don't enter one.
  • The sender claims that your email address or social media account was chosen at random.
  • The company claims that you need to cash a check and return a portion to cover taxes before claiming your winnings.

6. Car wrap scams

Car wrap scams feature criminals offering to pay vehicle owners to wrap their cars with advertisem*nts. As with other check deposit scams, the operators will insist that you return an overpayment using wire transfers or gift cards.

A Chesterfield woman thought she was receiving $1,700 for agreeing to place Dr. Pepper ads on her car [*]. Patricia Hill had unwittingly shared a copy of her driver’s license and Social Security number (SSN) to secure the fake check. Not only was she left without a car wrap — but also without recourse to settle her bank’s overdraft fees.

Warning signs:

  • Surprise offers to wrap your car with ads — scammers often pretend to represent popular beverage companies.
  • Someone contacts you via text message but (typically) declines to meet in person or over video calls.
  • The person sends you a check but asserts that you must return overpayments by wire transfer to cover the cost of the car wrap.

⛳️ Related: Was Your Car Registration Stolen? Here’s What To Do

7. Nanny or caregiver scams

Scammers pose as potential employers seeking a nanny or caregiver for their child. If you apply for the job, your supposed new employer dispatches a check before claiming to have overpaid you.

After Lundin Bellow answered an online ad for a babysitting job, her new employer represented herself as a mother intending to move to New York [*].

Lundin agreed to help by using a check given to her by the woman to buy household supplies and appliances — only to lose thousands when the check bounced.

Warning signs:

  • Listings for nanny or caregiver jobs that promise a high pay with minimal expectations.
  • No in-person interview or background check. It’s unlikely that a family will let anyone care for their children without a thorough interview process.
  • The employers claim that they are overseas or out of town but will promptly forward your first payment by check if you agree to buy some items.

8. Small business fraud

Criminals use check deposit scams to steal from sellers on online auctions or classified listing sites, like eBay or Craigslist. A fraudster will target someone selling expensive items such as cars or boats before attempting yet another overpayment scam.

Greg Rayburn had a brush with this type of scam during the sale of his big screen TV [*]. Scammers attempted to dupe him by sending multiple checks for amounts exceeding the asking price. This was accompanied by persistent text messages urging him to refund a surplus.

Warning signs:

  • The buyer has a limited track record of selling on platforms such as Facebook Marketplace or Craigslist.
  • Fraudulent buyers frequently possess incomplete or private profiles and reside in a different town or state.
  • You receive checks that exceed the agreed-upon price — even in cases when you did not finalize a sale with the individual online.

9. Remote deposit capture scams

Remote deposit capture (RDC) is an online banking service that allows customers to scan checks and remotely transmit the images to their bank for deposit.

Scammers may exploit a flaw in this mobile deposit feature by cashing the same check twice or by using different channels.

A Gaston County woman wrote a $1,000 check that was cashed twice, which is known as "double presentment" in banking terminology [*]. While this case was an honest mistake, mobile check deposit systems can leave people vulnerable to related scams.

Warning signs:

  • Someone sends you an image of a check and asks you to deposit it using mobile banking.
  • Someone uses a mobile check deposit service to transfer money into your debit account under suspicious circ*mstances.
  • The person urgently wants you to make the transfer. Remember that all check deposit scams have a small window for success. With RDC, the fraudster wants you to send money before the bank alerts you.

Can You Recover Money Lost to Fake Checks and Related Scams?

Financial institutions take fraudulent checks seriously, and lenders may place temporary holds on your account while they investigate. But that’s not the only consequence of depositing a fake check.

  • The bank may hold you responsible for repayment. You might have to repay the bank if you have spent or transferred money from the check.
  • You may have to pay fees. After a fraudulent check defaults, your account may be overdrawn. If it’s a credit card account, the incident could lead to late payment fees.
  • The bank could ban you. Without a satisfactory resolution, the bank may close your account completely and refuse to do business with you.

If a bank credited your account after you deposited a fraudulent check, it might be able to reverse the funds once it discovers the fake. But if not, you may be liable for the loss.

You should examine your deposit account agreement, your bank’s policies, and your state laws. If you deposit checks that turn out to be fake, your best recourse may be to consult the bank right away.

How To Reclaim Money After a Check Deposit Scam

Even if you can work with the bank to resolve the issue amicably, it's unlikely that the bank will reimburse any stolen funds. As the payee, it's generally up to you to pursue the person who gave you the check. Your next steps vary depending on how you sent the money. Consider your options below.

For wire transfers

If you act quickly enough, you may be able to stop a wire transfer. Contact the transfer service immediately to report the fraud.

  • For MoneyGram transfers, call 1-800-926-9400 or report fraud using this online form.
  • For Western Union transfers, call the fraud hotline at 1-800-448-1492 or use this online claims form.

If the transfer has not already been paid, it may be possible to stop the transaction.

For Peer-to-peer (P2P) payments

Due to the instantaneous nature of digital payments, it’s difficult to reverse P2P payments. But if you can prove that you’re the victim of fraud, Zelle and your bank may be able to refund you.

  • Notify your bank or financial institution. Provide all relevant details about the fraud, and request that they try to reverse payments.
  • Report the fraud to the platform. If you can prove to Zelle, for example, that someone unlawfully accessed your account, you could be eligible for a refund.

For Craigslist

If you paid the scammer through a secure method like PayPal, you might be eligible for Craigslist’s Purchase Protection. If you qualify, you could get a full or partial refund. You can submit a fraud report on Craigslist’s contact page.

For gift cards

Unfortunately, getting a refund for a gift card is virtually impossible. If you cashed a check and sent the money back to a stranger by using gift cards, this cannot be traced. Of course, it's worth reporting the incident to any companies involved (e,g. Amazon, Spotify, etc.).

For eBay

If you fall for check deposit scams on eBay, you might be covered by the auction site’s policies to protect buyers and sellers, including its Money Back Guarantee.

  • Open a refund request with the seller. First, you must attempt to find a resolution with the seller.
  • If you’re unable to resolve the issue yourself, report the seller to eBay. Make sure to leave a negative review on the seller’s page. This type of public feedback will deter other potential victims from doing business with the scammer.

How To Report Check Deposit Scams

As soon as you realize that you’ve been scammed, the first step should always be to contact your bank and place a fraud alert. Bank staff can use their expertise and technology to confirm if the check is, in fact, fake. If your timing is right, the bank may also be able to reverse the transaction before it’s too late.

But you shouldn’t stop there — by submitting reports with the agencies below, you can assist authorities in catching scammers and help prevent others from falling victim. Report check deposit scams to the following organizations:

Organization

Reporting Method

The Federal Trade Commission (FTC)

  • Submit a fraud report with the FTC at reportfraud.ftc.gov
  • Furnish all relevant information about the scam, including screenshots of text messages or phishing emails.

The U.S. Postal Inspection Service (USPIS)

If the scammer sent the bogus check or any related communications through direct mail, reporting the incident can help stop criminals from exploiting the postal system to defraud people.
You can file a mail fraud complaint with USPIS in one of three ways:

  • Call 1-877-876-2455
  • Visit uspis.gov
  • Mail queries to this address: Criminal Investigations Service Center, Attn: Mail Fraud, 433 Harrison Street, Room 3255, Chicago, IL 60699-3255

The Internet Crime Complaint Center (IC3)

The IC3 focuses on internet-related fraud. If the scam involved online communication or electronic funds transfers, file a complaint with the IC3.

The Better Business Bureau (BBB)

You can warn others by reporting your experience on the BBB Scam Tracker.

Your state’s attorney general

In most states, the attorney general is a leading force for consumer protection. If all other efforts at solving the issue fail, you can file a complaint about the fraud with your state’s attorney general.

Check Deposit Scams: An Old Con With New Tricks

America’s big banks reported an 84% increase in check fraud in 2022 [*]. As criminals now use Telegram, cryptocurrency, and clever social engineering tactics, it’s easier than ever to fall victim to this time-tested scam.

Even if you spot the warning signs and report the fraud, a refund is never guaranteed. If you want to protect your finances against check scams, consider Identity Guard.

Identity Guard’s award-winning identity theft protection includes credit monitoring and Safe Browsing tools to keep your finances and family safe. You’ll also be covered by a $1 million insurance policy for eligible losses due to identity theft.

Get 33% off when you sign up for Identity Guard today
Check Deposit Scams: Are You Liable for a Bad Check? (2024)

References

Top Articles
Latest Posts
Article information

Author: Jamar Nader

Last Updated:

Views: 6299

Rating: 4.4 / 5 (55 voted)

Reviews: 86% of readers found this page helpful

Author information

Name: Jamar Nader

Birthday: 1995-02-28

Address: Apt. 536 6162 Reichel Greens, Port Zackaryside, CT 22682-9804

Phone: +9958384818317

Job: IT Representative

Hobby: Scrapbooking, Hiking, Hunting, Kite flying, Blacksmithing, Video gaming, Foraging

Introduction: My name is Jamar Nader, I am a fine, shiny, colorful, bright, nice, perfect, curious person who loves writing and wants to share my knowledge and understanding with you.