The woman ahead of me at the bank looked grim. Could the teller help figure out whether this check was good? The woman had received it as payment for a "mystery shopping" job, and she suspected it was a fake.
The teller didn't know either.
Last month, the Consumer Federation of America, a Washington, D.C.-based consortium of U.S. consumer groups, launched a task force to deal with fake checks and give consumers details about the warning signs.
Roughly one of every three adults has been approached by someone offering a fake check at one point, the group said.
About 2 percent of those are taken for amounts averaging between $3,000 and $4,000 each.
"Most people are honest and think that other people are too," said Susan Grant, the federation's director of consumer protection. "They get a very real-looking check or money order that comes with a plausible story, and they don't understand that they will be held liable when it turns out to be fake."
People are also reading…
But how can a deposit cost you money? The con artist asks the recipient of a fake check to pass on a portion of the proceeds to a third-party conspirator — by writing a personal check off the victim's account or wiring money to another bank.
Jill Parker of Chicago, for example, said she and her husband were trying to rent out an apartment and placed an advertisement on the Internet.
They were contacted by a man in Britain who said his company was trying to open an office in Chicago. His company would make out a check to the Parkers for his moving expenses, he said. Could they take out their portion for the rent and pass the rest on to his agent?
Parker said both the executive and his request sounded legitimate, but the couple waited until they thought the check had cleared before they wired $22,000 of the $25,000 they'd received to the agent. Weeks later, the bank called them with the bad news: The check they'd received was bogus. Their account was being debited for the entire $25,000.
Why did their bank clear the check in the first place? U.S. banking laws demand that banks give customers access to their funds within one to five working days. (The timing depends on whether the check-issuing bank is foreign or domestic, local or out of state.) But it can take several weeks for a good forgery to make it all the way back through the check-processing system to the point when your bank determines the check was fake.
It's worth mentioning that many of these fake checks look so real that they easily fool bank tellers, Grant said. Nonetheless, when the bank determines that the check isn't valid, it's legally allowed to deduct the money from your account.
That's something that consumers commonly misunderstand, Grant said. The Consumer Federation conducted a recent survey and found that 59 percent of consumers inaccurately believe that when you deposit a check or money order, your bank has determined the funds are good before it allows you to withdraw the money.
More than half of youths and Hispanics surveyed also believed that if the check was bad, the person who provided it would have to reimburse the bank — not the depositor.
Not true. You, the depositor, are responsible for the money that goes in and out of your account. If you deposit a fake check but don't draw against it, the worst that can happen is that the money temporarily credited to your account will evaporate. But if you use that phony balance, you're responsible for any check or money order you've sent, even if you've been swindled.
Fake-check scams come in multiple varieties. A particularly hot variety right now is the mystery-shopper scam, Grant said, possibly because so many people are out of work and looking for ways to make ends meet.
In this scam, someone will ask you to rate the service, cleanliness or efficiency of a retailer or financial institution by visiting it and buying some small item.
Con artists using the mystery-shopper scam say they're providing an upfront payment for the small purchases the shopper needs to make to do the job. The check that's provided, however, is for $1,000 to $5,000 — far more than what's needed. The victim is told to wire the remainder to a third party to evaluate the speed and efficiency of the wire service.
In reality, mystery shoppers are paid after they've completed the job and turned in their evaluation forms, the Mystery Shopping Providers Association says. And it's not a big moneymaking opportunity. Most jobs pay $8 to $20.
Where to check suspicious offer
The best way to protect yourself is recognize the warning signs and stay clear. The Consumer Federation urges you to check out fakechecks.org