In a fake check scam, a person you don’t know asks you to deposit a check— sometimes for several thousand dollars, and usually for more than you are owed — and send some of the money to another person. The scammers always have a good story to explain why you can’t keep all the money. They might say they need you to cover taxes or fees, you’ll need to buy supplies, or something else.
Jun 30, 2020 USPS introduces online money order status tool. Postal Service customers can check the status of their money orders through a new interface on usps.com. The feature allows customers to see a near-real-time status of money orders they purchase at Post Offices, including if an order has been cashed.
Fake checks come in many forms. They might look like business or personal checks, cashier’s checks, money orders, or a check delivered electronically. Here’s what you need to know about fake check scams.
Types of Fake Checks Scams
Fake checks are used in many types of scams. Here are some examples:
- Mystery shopping. Scammers pretend to hire people as mystery shoppers and tell them their first assignment is to evaluate a retailer that sells gift cards, money orders, or a money transfer service, like Western Union or MoneyGram. The shopper gets a check with instructions to deposit it in a personal bank account and wire it to someone else. But once the money is wired, the person on the other end can disappear.
- Personal assistants. People apply online and get hired as personal assistants. They get a check and are told to use the money to buy gift cards or to buy equipment or supplies for their new client. Once the scammers get the gift card PIN numbers, they use them instantly, leaving the “personal assistant” without the money when the bank figures out the check is bad.
- Car wrap decals. People interested in car wrap advertising are told to deposit checks and send money to decal installers — who don’t exist.
- Claiming prizes. Sweepstakes “winners” are given checks and told to send money to cover taxes, shipping and handling charges, or processing fees. But that’s not how legitimate sweepstakes work.
- Overpayments.People buying something from you online “accidentally” send a check for too much and ask you to refund the balance.
Why Do These Scams Work?
These scams work because fake checks generally look just like real checks, even to bank employees. They are often printed with the names and addresses of legitimate financial institutions. They may even be real checks written on bank accounts that belong to identity theft victims. It can take weeks for a bank to figure out that the check is a fake.
Fake Checks and Your Bank
By law, banks have to make deposited funds available quickly, usually within two days. When the funds are made available in your account, the bank may say the check has “cleared,” but that doesn’t mean it’s a good check. Fake checks can take weeks to be discovered and untangled. By that time, the scammer has any money you sent, and you’re stuck paying the money back to the bank.
Your best bet: Don’t rely on money from a check unless you know and trust the person you’re dealing with.
How To Avoid a Fake Check Scam
- Never use money from a check to send gift cards, money orders, or wire money to strangers or someone you just met. Many scammers demand that you send money through money transfer services like Western Union or MoneyGram, or buy gift cards and send them the PIN numbers. Once you wire money, or give someone the gift card PINs, it is like giving someone cash. It’s almost impossible to get it back.
- Toss offers that ask you to pay for a prize. If it’s free, you shouldn’t have to pay to get it.
- Don’t accept a check for more than the selling price. You can bet it’s a scam.
What To Do If You Sent Money to a Scammer
Gift cards are for gifts, not payments. Anyone who demands payment by gift card is always a scammer. If you paid a scammer with a gift card, tell the company that issued the card right away. When you contact the company, tell them the gift card was used in a scam. Ask them if they can refund your money. If you act quickly enough, the company might be able to get your money back. Also, tell the store where you bought the gift card as soon as possible.
Here is a list of gift cards that scammers often use — with information to help report a scam. If the card you used is not on this list, you might find the gift card company’s contact information on the card itself, or you might need to do some research online.
If you wired money to a scammer, call the money transfer company immediately to report the fraud and file a complaint. You can reach the complaint department of MoneyGram at 1-800-MONEYGRAM (1-800-666-3947) or Western Union at 1-800-325-6000. Ask for the money transfer to be reversed. It’s unlikely to happen, but it’s important to ask.
If you paid a scammer with a money order, contact the company that issued the money order right away to see if you can stop payment. Also, try to stop delivery of the money order: if you sent it by U.S. mail, contact the U.S. Postal Inspection Service at 877-876-2455. Otherwise, contact whatever delivery service you used as soon as possible.
Where To Report Fraud
If you think you’ve been targeted by a fake check scam, report it to:
- The Federal Trade Commission
- The U.S. Postal Inspection Service
- Your state Attorney General
Fake Check Scams Infographic
In this article:
Because they're widely accepted as the equivalent of cash, money orders are a popular means of making payments around the world—but that also makes them a favorite tool of con artists and forgers.
How To Track A Money Order
Here's some guidance on how to get the convenience of money orders while avoiding the scams thieves too often build around them.
What Is a Money Order?
A money order is essentially a paper check that's not connected with a bank account. To get one, a purchaser gives the money order issuer the amount of cash they want to send plus a small fee. In return, they get a money order they can fill out and give to a recipient; usually recipients such as landlords or other merchants that only accept cash or checks will also accept money orders.
Money orders can be a convenient way to receive or send money—but they're also susceptible to fraud. Money order scams usually target online sellers of merchandise or services, but buyers can fall victim as well. Before you use a money order to pay a merchant or receive payment, it's important to know how money order fraudsters operate.
Typical Money Order Scams
Most money order cons involve sending you (the victim) a bogus money order as payment for a purchase or other transaction, persuading you to deposit the funds in your checking account, and then getting you to take further action before the fraud is discovered.
Variations on these schemes are virtually endless—criminals are a resourceful bunch—but the better-known scams include the following:
- Bogus buyer. In the simplest form of money order payment fraud, the thief sends a bogus money order to purchase merchandise you're selling. You send them the goods, and by the time you discover the payment's no good, they've got your stuff. This is most commonly used with goods that are easy to resell, like phones and other electronic devices, and typically involve shipment to private P.O. boxes.
- Bogus buyer's remorse. The scammer mails a fake money order as payment for a purchase, but before you have time to ship the item (or even receive the money order in the mail), they email to say a financial emergency is forcing them to renege on the purchase. They tell you to keep a portion of the purchase price for your trouble (which of course entails depositing the money order) and to refund the rest—and to do it in a hurry, because they really need the cash.
- Rental reversal. This is basically a real estate-specific variation on the buyer's remorse ploy: The crook sends a fake money order that covers a non-refundable security deposit, plus some or all of a vacation home rental or a bed-and-breakfast stay. Then they immediately cancel and request a refund, expecting you to deposit the money order to get the deposit and then send the rest back as a refund.
- Overpayment ploy. With this method, also known as an 'excess' scam, the crook agrees to buy an item for sale online, pays with a (bogus) money order for an amount larger than the price of the item, then asks you to send back the amount they overpaid. Anytime you get a payment that exceeds the amount you expect, alarms should go off: Don't deposit the money order.
- Deposit assistance. In this scheme, the fraudster claims to have no bank account and is somehow too helpless to open one (banks in their home country can't be trusted, there are no banks within reach of their village, and so on), so they need a kind stranger to make a deposit on their behalf and then forward them the funds. A scaled-up variation plays on the gig economy: You're offered a freelance job with a title like 'funds administrator,' which requires you to make money order deposits and then transfer the funds somewhere else. In this scenario, the first few money orders might actually clear to warm you up for a large final transfer based on a bogus money order. But even those 'legit' deposits could be tainted: If they represent ill-gotten funds, you could be laundering criminals' cash.
Depending on how good a forged money order is, it could take more than a week after you make your deposit for your bank or credit union to discover the fraud. To capitalize on that delay, crooks often try to create a sense of urgency to hurry their shady transactions along. Some scammers play for sympathy—for example, claiming cash is needed for a medical emergency. Some go for intimidation—demanding an immediate refund on an item they claim is unacceptable, for instance. Still others play on fear, claiming you must act quickly to save a kidnapping victim.
Cons and Consequences
If you comply with a money order scammer's requests, the best you can hope for is that you'll lose whatever merchandise or portion of their 'payment' you send to them or their criminal partners. But the hit to your pocketbook could be even greater. Policies differ among banks and credit unions, but most will give you immediate access to at least a portion of a money order deposit.
When the crime is discovered, the institution will take back those funds immediately, and if you've spent any of that money, you could end up bouncing a check or ending up with a negative account balance. Both of those events typically trigger fees or penalties, and if you miss a bill payment as a result of a bad check, you'll likely face a late fee from the payee—and your credit scores could even suffer as a result.
Scams That Seek Money Order Payments
The ability to cash money orders easily means criminals sometimes ask you to send them funds in that form as part of more traditional phishing scams and other schemes aimed at separating you from your money. Many of these could extract payment by check, credit card or electronic transfer as well. If you make a money order payment to someone you later suspect is a swindler, you can try to cancel payment on the money order, but doing so can be expensive, and it only works if you act before the money order is cashed.
Tips to Help Prevent Being Scammed
Here are some basic tips for avoiding bogus money order transactions:
How To Postal Money Order
- Verify the funds. Before depositing a money order, call the phone number or visit the website listed on the document, and use the serial number to check its validity. This isn't a perfect solution, but it will rule out many bogus money orders.
- Look for obvious signs of forgery. The U.S. Postal Service provides a web page that points out the anti-counterfeiting features of its money orders. Western Union and MoneyGram use watermarks and heat-sensitive inlays to safeguard their money orders, but you won't find examples of them online. If you're suspicious of (or just unfamiliar with) the design features of a money order, take it to an outlet that sells those money orders and ask an employee to inspect it.
- Look for tampering. Because crooks also sometimes doctor legitimate money orders, altering how much they're made out for (so a $10 order becomes a $1,000 one, for example), you should also look for signs of tampering on the 'amount' line. If you suspect anything is amiss, don't make a deposit.
- Be wary of needless urgency. Money order crooks are always in a hurry, so if someone starts pushing you hard to deposit and transfer money order funds, something could be amiss.
- Sit tight when you receive a money order. Hold off on spending any portion of a money order deposit until the full amount clears. Don't write checks against a deposit, and certainly don't issue any refunds until the deposit is verified.
- Maintain money order records. Always keep a copy of money orders you deposit, and receipts for money orders you send. If you're the victim of a money order scam, sharing this information with law enforcement can be very helpful.
Report Money Order Scams
If you've been scammed with a money order, contact your local law enforcement agency and report the theft, and ask for additional guidance on where to report the crime. Because money order scams typically involve the mail, you can also contact U.S. Postal Inspectors to alert them. Depending on whether the scam originates in the U.S. or abroad, you may be advised to notify other federal law enforcement agencies as well.
How To Verify A Postal Money Order Is Real Check
Look for Money Order Alternatives
Money orders are a terrific medium for exchanging cash with friends, family members and others you know and trust. Their popularity with criminals should make you think twice about using them with strangers or people you know online but have never met face-to-face. People conducting business online should have access to electronic methods of transferring cash, such as PayPal, Venmo and the like, that can be quicker and more secure than money orders. Try to use those services whenever possible. When you do use money orders, if you take care and follow these tips, you can avoid being a money order scam victim.