AG - Counterfeit Check Scams

Counterfeit Check Scams

CONSUMER ALERT

BILL SCHUETTE

ATTORNEY GENERAL

The Attorney General provides Consumer Alerts to inform the public of unfair, misleading, or deceptive business practices, and to provide information and guidance on other issues of concern. Consumer Alerts are not legal advice, legal authority, or a binding legal opinion from the Department of Attorney General.

COUNTERFEIT CHECK SCAMS

If you have an e-mail account, then you have received an e-mail trying to trick you into some form of a counterfeit check scam. The con artists' creative stories seem endless and the e-mails purport to come from all sorts of locations including Lagos, Nigeria, South Africa, Europe, and even Canada. In one e-mail, it is a high-ranking government official contacting you, while in another it is a bank employee contacting you to stand in as next of kin for a dead millionaire. In another version, it is a widow contacting you for investment advice. In yet another version, it is a religious person looking to make a donation to your church. The versions are unlimited but the ultimate result for a victim is the same - a large loss of money and an individual who is ashamed he or she did not recognize the scam.

TRADITIONAL COUNTERFEIT CHECK SCAMS

For those who want more background on how these scams unfold, here is the general progression of events:

The potential victim (target) receives an unsolicited letter, fax, or e-mail proposal.
An offer is made to transfer millions of dollars into the target's bank account.
The target is asked to provide bank account numbers, telephone numbers, and other identifying information.
Numerous documents are sent to the target with official looking seals, stamps, etc. testifying to the authenticity of the proposal.
The target is eventually asked to provide up-front or advanced fees to cover taxes, attorney fees, transactions fees, bribes, etc.
The target is often, but not always, encouraged to travel overseas to complete the transaction.

In a more recent variation, the con artist will set up a fake online bank and deposit funds into a bogus account.

COUNTERFEIT CHECK SCAM VARIATIONS

Other tricks on this old scam involve a response to an online offer to sell or auction goods (usually expensive items). Here is how the scam may unfold:

The con artist "buyer" e-mails the seller to express interest in the item, offering to pay with a U.S. bank cashier's check.
Once the offer is accepted, the "buyer" makes some excuse for sending a cashier's check that is several thousand dollars more than the cost of the item and wants the seller to send excess money: 1) to cover transportation costs for the purchased good; 2) because the buyer's secretary made a mistake and put the wrong check in the envelope; 3) with the purchased product; or 4) to a third party to cover an existing debt.
Credibility is added to the ploy when the "buyer" insists that the money only be sent after the cashier's check clears.
The cashier's check is an elaborate counterfeit, and it takes the bank longer than usual to discover the fake.
The seller thinks they received a good check and sends the goods and the "extra" cash.
The bank notifies the seller the cashier's check is a counterfeit and removes the check amount from the seller's account. The seller lost the goods and cash.

Another variation on a common theme is a "mystery shopper" scheme. Consumers are approached to be "mystery" or "secret" shoppers, and they believe they are being hired to evaluate the effectiveness of a money transfer service. The scammer sends the consumer a cashier's check for thousands of dollars. Then the consumer is instructed to cash the check at their bank and then visit a large retailer that offers money transfer services. The consumer is told to pretend to be a customer wiring money to a relative in another country, usually Canada. The consumer is often instructed to wire most of the money and keep the rest as payment for acting as a "mystery shopper."

Other variations of counterfeit cashier's check scams involve winning a lottery or sweepstakes or a work-at-home job to act as an intermediary for international transactions or otherwise facilitating the processing of payments wherein the consumer is asked to cash checks for other parties.

With all variations of this scam, the cashier's check received is a fake. After a few days or weeks, when the consumer's bank realizes the check is counterfeit, the consumer is responsible for paying the bank back thousands of dollars.

BUSINESSES CAN BE VICTIMIZED TOO

Businesses, such as hotels, can also fall pray to counterfeit cashier check scams. In a variation on the counterfeit check scams described above, hotel operators receive e-mails requesting a reservation. The request generally looks like it is coming from a travel agent outside of the United States. The e-mail provides bogus names of future guests and dates of arrival. In most cases, the perpetrator will ask to pay for the rooms and any other services using a cashier's check. When the cashier's check arrives, the perpetrator tells the hotel operator that they mistakenly sent too much money, and asks the hotel operator to send back the rest. Or, the perpetrator may cancel the reservation or services for some of the future guests and ask for a partial refund. As with most other counterfeit check scams, the check the perpetrator sent for payment is fake. If the hotel operator "returns" any money to the perpetrator, the business person is responsible to the bank for that money when it is discovered that the original check was bogus.

In order to make this variation on the counterfeit cashier's check scam more effective, the scammers may target smaller hotels and ask for reservations during the slow winter travel season. Thus, hotel operators, especially of small hotels who need some guests during the winter months to survive financially, may wind up losing a significant amount of money.

Some law firms have even fallen victim to counterfeit check scams. The FBI recently warned lawyers about a new variation of a counterfeit check scam in which lawyers receive e-mails from phony prospective clients. Generally, the e-mail appears to be from a prospective client who claims to be out of the country, but asks for the lawyer's help in collecting a debt from a third party. In one example, the prospective client asks the lawyer to help collect a debt from her ex-husband. The lawyer agrees, and demands payment from the ex-husband. The ex-husband quickly sends payment via a cashier's check, and the client instructs the lawyer to send her the payment, minus the lawyer's fee.

Hotels, law firms, and all other businesses, should be extremely cautious of requests such as those described above. To further protect themselves, small business owners should:

Accept only certified checks or bank checks verified by the issuing bank;
Not return any money until your bank is sure this check is not counterfeit. Although funds may be available for withdrawal within a few days, it may take a few weeks for a bank to discover a counterfeit. Until everyone is certain it is real, don't spend any of the money from the cashier's check.

COUNTERFEIT CASHIER'S CHECK ALERT

Consumers must be alert to the fact that just because money from the check may be made quickly available this does not mean a check is valid. The check must go back to the originating bank, and it must clear. This process can take several days and, in the case of an elaborate counterfeit, may take a few weeks.

REPORT ADVANCED FEE FRAUD

These con artists target senior citizens. It is important to be alert to any sign that a vulnerable family member is being victimized and to discuss such fraud with loved ones and their caregivers. If you or someone you know lost money, then the activity should be reported to the Secret Service's field office nearest you. Michigan has three offices: Detroit 313-226-6400; Grand Rapids 616-454-4671; and Saginaw 989-752-8076. Additional contact information can be located in your phone book or at http://www.secretservice.gov/contact/field-offices/.

If the correspondence you received involves a Canadian address or phone number, you may also wish to inform PhoneBusters by sending an e-mail to info@phonebusters.com or calling toll-free 1-888-495-8501.