How to Avoid Check Scams

How to Spot and Avoid Check Scams

Check fraud is one of the most common and fastest-growing scams in the United States. Despite the increasing popularity of digital payments, scammers continue to target paper checks because they lack many of the security features found in modern systems. From mail theft to check washing to the issuance of fake checks, the Financial Crimes Enforcement Network (FinCEN) reports that millions of check fraud complaints are filed each year, resulting in losses totaling tens of billions of dollars.

While check fraud is a nationwide issue, Hawaii residents are particularly vulnerable due to their reliance on mailed rent checks, inter-island business transactions, and other mailed payments. At HFS FCU, we prioritize protecting our members from fraudulent activities. As a member-focused financial institution, we combat fraud by incorporating advanced security features, real-time fraud detection and alerts, and offering educational resources on scam prevention education and banking best practices.

Read on to learn more about common check scams, how to stay safe, and how HFS FCU can assist you.

What Is Check Fraud?

Check fraud is an illegal act involving the use of paper checks to deceive a financial institution or an individual into paying money. This type of fraud remains popular due to the high level of trust consumers place in physical checks, combined with the weeks-long delay between when a paper check is deposited and when it fully clears.

For example, banks and credit unions typically make funds available within 1-2 business days after a check is deposited. However, it can take weeks for a check to fully clear. During this time, fraudulent checks may be deposited, and funds might be spent or wired before the check is identified as fraudulent. Unfortunately, consumers are usually held financially responsible for any missing money resulting from such transactions. Check fraud often involves identity theft as well.

Common Types of Check Fraud Schemes

The best defense against becoming a victim of check fraud is to be aware of the common schemes to watch out for. Here are some prevalent types of check fraud:

Fake Cashier’s Check Scams

In this scam, someone sends you a high-quality fake cashier’s check. You are instructed to deposit the check and then send a portion of the funds back to the scammer or another party. Once you deposit the check, the funds become available quickly. However, if the bank later determines that the check is fraudulent, the deposit will be reversed, and you will be responsible for the loss.

In Hawaii, the rental housing market and transactions on platforms like Craigslist and Facebook Marketplace are particularly susceptible to these scams..

Overpayment and Refund Scams

This scam occurs when a buyer “accidentally” sends a check for more than the agreed-upon price for an item and then asks the seller to wire back the difference. In reality, the initial check is fake while the money wired back is real. Ultimately, the seller loses both the item and the money.

Always remember that no legitimate transaction requires returning a portion of a payment. If someone pressures you to quickly return funds or send money before their original payment has fully cleared, it’s a red flag.

Unexpected Check in the Mail

This scam involves receiving an unsolicited check in the mail, often for a small amount or disguised as a prize. If you deposit it, you risk exposing your account information. Should the check bounce, you may incur overdraft charges. Scammers sometimes follow up after sending unsolicited checks to request fees or personal information. This type of scam is similar to others that might occur on social media.

Check Washing and Altered Checks

Check washing and alteration take place when scammers intercept checks sent through the mail and change them to larger amounts. This is a common scam, especially for mailed rent and bill checks in Hawaii, which have become targets due to increasing mailbox theft. To reduce the risk of check washing or alteration, use a USPS blue collection box rather than a curbside mailbox when mailing any payments.

Counterfeit and Forged Checks

Counterfeit checks are fraudulent checks printed with stolen account information, while forged checks are real checks with fake signatures. Scammers can easily obtain account information from discarded paper statements or compromised mail. To protect yourself, remember to shred these documents. Also, note that some counterfeit checks are now deposited via mobile app, which can create new complexities.

Red Flags That Signal a Check Scam

Think you might be the victim of a check scam? Look for these red flags:

You’ve received a payment for more than an agreed-upon amount.
You’re under pressure from a seller to wire back an overpayment.
You’ve received a random check from someone you don’t know.
You’ve received a request to use a gift card.
You’ve received a prize that requires some sort of an upfront payment to access.

If you’re ever suspicious of a situation, don’t deposit the check. Instead, contact HFS FCU.

How to Avoid Check Fraud: 7 Steps to Protect Yourself

Here’s a closer look at how to protect yourself from check fraud:

If you receive a check, verify the issuing bank. Don’t just use the contact details on the check.
If you receive a check and are asked to make a payment, do not do so until the check has fully cleared, not just when the money appears in your account.
Always shred old checks, billing statements, and bank statements to prevent unauthorized access to your information.
Regularly check your checking account using mobile or online banking tools to spot any unusual activity.
When mailing a check, avoid using a curbside mailbox. Instead, deliver it directly to a post office or a secure USPS collection box.
Try to limit the number of items you pay for with a check. Switch to digital payments when you can to decrease your overall risk.
Sign up for account alerts with HFS FCU so you can more proactively address any issues as they occur.

By following these steps, you can significantly reduce your risk of falling victim to check fraud.

How HFS FCU Helps Protect Members from Check Fraud

At HFS FCU, we take a proactive approach to protecting our members from check fraud. Some of the tools we have in our arsenal to keep our members safe include account alerts, active fraud monitoring, mobile banking with deposit verification, and the opportunity to speak with a local representative to address questions or issues in the event of unusual account activity.

It’s all part of the credit union difference and HFS FCU’s commitment to protecting its members with advanced security solutions.

What to Do If You’ve Already Been Targeted by a Check Scam

If you believe you’ve been targeted by a check scam, take the following steps:

Freeze all spending on your account and cease communication with the scammer.
Contact HFS FCU or your financial institution immediately to report the issue.
File reports with the FTC at reportfraud.ftc.gov as well as local law enforcement.
Monitor your credit report and other accounts.

If you’re an HFS FCU member, contact us directly. This also applies if you’re a victim of any other type of financial scam, like credit card fraud.

Stop Check Scams Before They Stop You: Bank With a Credit Union You Can Trust

At HFS FCU, we are dedicated to protecting our members from all forms of financial fraud. We take scams seriously and are committed to implementing real safeguards to keep your financial information secure. Our team continuously monitors the latest scam trends to ensure the safety of our members. To become an HFS FCU member, schedule an appointment at your local branch today.

Frequently Asked Questions About Check Scams

What is the most common type of check fraud?

The most common types of check fraud include fake cashier’s checks, overpayment scams, receiving an unexpected check in the mail, check washing and altering, and counterfeit checks.

How can I tell if a cashier’s check is real or fake?

To verify a cashier’s check, contact the issuing bank directly. Avoid calling the number printed on the check; instead, look up the bank’s contact information independently.

What should I do if I deposited a fake check by accident?

Immediately freeze your spending to prevent any withdrawal of funds. Then, contact your financial institution’s fraud department to report the incident.

How long does it take for a check to actually clear?

Standard personal and business checks usually take 1-2 business days to clear.

Can I get my money back if I’m a victim of check fraud?

Yes, but it depends on whether the check was authorized. The best action is to contact your bank or credit union as soon as you suspect check fraud.

Is mobile check deposit safe?

Yes, mobile check deposits are generally safe and secure, as they use advanced encryption to protect your data.

Why do scammers use checks instead of other payment methods?

Scammers often choose checks because they can exploit the delay in banking clearance. While banks and credit unions make deposited funds available quickly, verifying a check’s authenticity can take weeks.

Does HFS FCU monitor my account for fraudulent checks?

Yes, we provide proactive solutions, including account alerts, active fraud monitoring, mobile banking with deposit verification, and the opportunity to consult with a local representative if unusual account activity is detected.