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March 26th, 2009
10:24 AM ET

Protect yourself from counterfeit check scams

David Gewirtz | BIO
Editor-in-Chief, ZATZ Publishing

Our banks are struggling in a world of self-inflicted hurt, but now they're also suffering from a very old-school problem: counterfeit checks.

Counterfeiting, of course, has been around forever and the first fake check was probably created within days of the first genuine check being printed.

I get regular security alerts from the Federal Deposit Insurance Corporation (FDIC) about banking and security problems. And, from time-to-time, I get alerts about counterfeit checks. The other day, however, I got seven Special Alerts, one right after the other.

That's a record.

City National Bank of Beverly Hills, California, Mile High Banks of Longmont, Colorado, Commonwealth Bank, FSB of Mount Sterling, Kentucky, and The Clinton National Bank of Clinton, Iowa have each contacted the FDIC to report that fake cashier's checks bearing the institutions' names are in circulation.

Bank of Ripley of Ripley, Tennessee and Plantation Federal Bank of Pawleys Island, South Carolina have, too. So did the State Bank of De Kalb, Texas.

These counterfeit checks aren't just a headache for the banks. They're also a problem for you and me.

Counterfeit checks are often used to buy goods and services. You might sell a car, for example, and take payment in what appears to be a perfectly good cashier's check. The scam stings when you bring the check to the bank and discover that not only do you no longer have your car, you also were paid with a fake check.

Protecting yourself

The Federal Trade Commission lists eight precautions you can take to make sure you're not falling for a fake check scam:

* Throw away any offer that asks you to pay for a prize or a gift. If it's free or a gift, you shouldn't have to pay for it. Free is free.

* Resist the urge to enter foreign lotteries. It's illegal to play a foreign lottery through the mail or the telephone, and most foreign lottery solicitations are phony.

* Know who you're dealing with, and never wire money to strangers.

* If you're selling something, don't accept a check for more than the selling price, no matter how tempting the offer or how convincing the story. Ask the buyer to write the check for the correct amount. If the buyer refuses to send the correct amount, return the check. Don't send the merchandise.

* As a seller, you can suggest an alternative way for the buyer to pay, like an escrow service or online payment service. There may be a charge for an escrow service. If the buyer insists on using a particular escrow or online payment service you've never heard of, check it out. Visit its website, and read its terms of agreement and privacy policy. Call the customer service line. If there isn't one - or if you call and can't get answers about the service's reliability– don't use the service. Here are FTC tips on escrow services and online payment systems.

* If you accept payment by check, ask for a check drawn on a local bank, or a bank with a local branch. That way, you can make a personal visit to make sure the check is valid. If that's not possible, call the bank where the check was purchased, and ask if it is valid. Get the bank's phone number from directory assistance or an Internet site that you know and trust, not from the check or from the person who gave you the check.

* If the buyer insists that you wire back funds, end the transaction immediately. Legitimate buyers don't pressure you to send money by wire transfer services. In addition, you have little recourse if there's a problem with a wire transaction.

* Resist any pressure to "act now." If the buyer's offer is good now, it should be good after the check clears.

Be a little paranoid

There's always going to be people out there who try to take advantage of others. But in a down economy, there are a lot more scams - and it hurts a lot more to get ripped off.

While law enforcement is out there attempting to stop the problems at the source, you can help protect yourself. Be a little paranoid. Don't take anything at face value. And double and triple check everything. If it relates to money (or, frankly, anything on the Internet), be extra careful.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.


Filed under: David Gewirtz • Economy • Technology
soundoff (2 Responses)
  1. Isabel Siaba

    great tips!

    March 26, 2009 at 3:42 pm |
  2. Michael "C" Lorton, Virginia

    The previous article said---with the job market being doom and gloom---create your own business---I guess some people are avoiding that interim phase and going directly to the gold---create their own money......

    March 26, 2009 at 11:56 am |