Hello, this is CoBank’s Fraud Wise, helping you avoid becoming a victim of fraud. My name is Bora Manzanares, supervisor of the financial crimes compliance team here at CoBank.
Most people are aware of the danger of having a check—or blank check stock—stolen and how this can lead to altered check fraud.
However, perpetrators of check fraud have another tool in their arsenal of deceit. They can create counterfeit checks using their own paper, but with your legitimate account and bank routing numbers. All they need is those numbers – which they can get from a legitimate check, or through phishing schemes such as requesting the information for fake reasons through email or phone scams.
Once they have a counterfeit check – your counterfeit check – they can use it to commit any number of fraud scams. Here are just a few.
In a check overpayment scam, the perpetrator will send the counterfeit check for more than the amount they owe someone, and then ask them to wire back the balance. Or, they send a check and ask the recipient to deposit it, keep part of the amount for their own compensation, and then wire the rest back for one reason or another. The danger here is that the money is coming out of your bank account, and it looks like you’re the one perpetrating the fraud.
In a lottery or sweepstakes scheme, the perpetrator will send a counterfeit check to a target with notification that it’s for payment of their winnings. They then ask the target to pay a fee to process the payment. The target deposits the check, which is eventually found to be fraudulent, and then is also out any fees they paid. Again, fingers may point your way, and you’ll need to prove that the check was not yours.
In a secret shopper scheme, the perpetrator sends a counterfeit check to the target, telling them that it’s pre-payment for their services as a secret shopper. They’re directed to deposit the check, and then use some of the proceeds to test a store’s money wiring service by sending money back to the perpetrator, or to buy gift cards and then send pictures or the card numbers. Once the bank discovers that the initial check was fraudulent – which can take a few weeks – the target is out all the money they spent on their secret. And the person who inadvertently provided the account numbers used on the counterfeit check may be on the hook for the check amount.
Positive Pay processes can help you detect counterfeit check fraud, either when the bank compares these incoming check payments to your issued item list, or you make the comparison in a reverse positive pay approach.
Your best protection is to protect your bank account and routing numbers so no counterfeit checks can be created in the first place. Keep your check stock and written checks secure. And, if you don’t have Positive Pay, reconcile your accounts frequently, if not daily, to identify any fraud quickly.
If you’re the victim of counterfeit check fraud, report it to your bank immediately so they can begin remediation.
This has been CoBank Fraud Wise, helping you protect against fraud.