Fake Checks
Many consumers don't realize that if they deposit a phony check into their bank account and then draw on those funds, they are liable for the money, even if they've been swindled. Roughly one of every three adults has been approached by someone offering a fake check at one point, the group said. About 2% of those are taken for amounts averaging between $3,000 and $4,000 each.

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.

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.

Why does a 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. 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. When the bank determines that the check isn't valid, it's legally allowed to deduct the money from your account.

Fake-check scams come in multiple varieties. A common thread is typically that the crooks have overpaid you, and want you to reimburse them or a confederate from your own funds or the "proceeds" from the check they've given you.

A particularly hot variety right now is the mystery-shopper scam. In this scam, someone will ask you to rate the service, cleanliness or efficiency of a retailer or financial institution by visiting the operation 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.

Some of the other common tales that purveyors of fake checks use:

• You've won a sweepstakes or lottery. They're sending a check, but you need to reimburse a third party for taxes on the windfall.
• You've been selected to receive a cash grant, but need to pay a processing fee.
• Or, you've got a buyer -- or renter -- of some product you have for sale, but the buyer needs you to take a corporate check for the payment and reimburse them for the overage.

The best way to protect yourself is recognize the warning signs and stay clear. If you need more details, the Consumer Federation urges you to check out fakechecks.org.
5/31/09 LA Times

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