Security

Fake Check Scams

Fake check scams are clever ploys designed to steal your money. You can avoid becoming a victim by recognizing how the scam works and understanding your responsibility for the checks that you deposit in your account.

If someone you don’t know wants to pay you by check but wants you to wire some of the money back, beware! It’s a scam that could cost you thousands of dollars.

Check Scams 

• There are many variations of the fake check scam. It could start with someone offering to buy something you advertised, pay you to do work at home, give you an “advance” on a sweepstakes you’ve supposedly won, or pay the first installment on the millions that you’ll receive for agreeing to have money in a foreign country transferred to your bank account for safekeeping. Whatever the pitch, the person may sound quite believable.
• Fake check scammers hunt for victims. They scan newspaper and online advertisements for people listing items for sale and check postings on online job sites from people seeking employment. They place their own ads with phone numbers or email addresses for people to contact them. They buy “sucker lists” on the black market which has sensitive information of people who have been previously scammed. And they call or send emails or faxes to people randomly, knowing that some will take the bait.
• They often claim to be in another country. The scammers say it’s too difficult and complicated to send you the money directly from their country, so they’ll arrange for someone in the U.S. to send you a check.
• They tell you to wire money to them after you’ve deposited the check. If you’re selling something, they say they’ll pay you by having someone in the U.S. who owes them money send you a check. It will be for more than the sale price; you deposit the check, keep what you’re owed, and wire the rest to them. If it’s part of a work-at-home scheme, they may claim that you’ll be processing checks from their “clients.” You deposit the checks and then wire them the money minus your “pay.” Or they may send you a check for more than your pay “by mistake” and ask you to wire them the excess. In the sweepstakes and foreign money offer variations of the scam, they tell you to wire them money for taxes, customs, bonding, processing, legal fees, or other expenses that must be paid before you can get the rest of the money.
• The checks are fake but they look real. In fact, they look so real that even bank tellers may be fooled. Some are phony cashier’s checks, others look like they’re from legitimate business accounts. The companies whose names appear may be real, but someone has dummied up the checks without their knowledge.
• You don’t have to wait long to use the money, but that doesn’t mean the check is good. Under federal law, banks have to make the funds you deposit available quickly–usually within one to five days, depending on the type of check. But just because you can withdraw the money doesn’t mean the check is good, even if it’s a cashier’s check. It can take weeks for the forgery to be discovered and the check to bounce.
• You are responsible for the checks you deposit. That’s because you’re in the best position to determine the risk you’re the one dealing directly with the person who is arranging for the check to be sent to you. When a check bounces, the bank deducts the amount that was originally credited to your account. If there isn’t enough to cover it, the bank may be able to take money from other accounts you have at that institution or sue you to recover the funds. In some cases, law enforcement authorities could bring charges against the victims because it may look like they were involved in the scam and knew the check was counterfeit.
• There is no legitimate reason for someone who is giving you money to ask you to wire money back. If a stranger wants to pay you for something, insist on a cashier’s check for the exact amount, preferably from a local bank or a bank that has a branch in your area.

Identity Theft

Identity (ID) theft is a crime where a thief steals your personal information, such as your full name or social security number, to commit fraud. The identity thief can use your information to fraudulently apply for credit, file taxes, or get medical services. These acts can damage your credit status, and cost you time and money to restore your good name. You may not know that you are the victim of ID theft until you experience a financial consequence (mystery bills, credit collections, denied loans) down the road from actions that the thief has taken with your stolen identity.

Types of Identity Theft

There are several common types of identity theft that can affect you:

• Child ID theft- Children’s IDs are vulnerable because the theft may go undetected for many years. By the time they are adults, the damage has already been done to their identities.
• Tax ID theft - A thief uses your social security number to falsely file tax returns with the Internal Revenue Service or state government.
• Medical ID theft- This form of ID theft happens when someone steals your personal information, such as your Medicare ID or health insurance member number to get medical services or to issue fraudulent billing to your health insurance provider.
• Senior ID theft - ID theft schemes that target seniors. Seniors are vulnerable to ID theft because they are in more frequent contact with medical professionals who get their medical insurance information, or caregivers and staff at long-term care facilities that have access to personal information or financial documents.
• Social ID theft - A thief uses your name, photos, and other personal information to create a phony account on a social media platform.

Love Scam

Don’t let a romance scam break your heart.

Be on the lookout for scam artists running the romance scam. Online dating websites typically see a surge in sign-ups between New Year’s Day and Valentine’s Day. Whether you’re trying out online dating for the first time or just want to brush up on your romance scam detection skills, this Fraud Alert is for you!

Fraud Alert

In 2015, there were more than 80 complaints from consumers who were approached by con artists seeking to defraud them through a romantic scheme. Unfortunately, falling for this scam can be extremely costly. It has consistently been ranked as one of, if not, the most expensive scams for the victims. In many cases, consumers report sending tens, or even hundreds, of thousands of dollars to the scam artists.

It’s not hard to see why. Love is a powerful emotion. Most of us would do practically anything to help out a friend or loved one in need. Fraudsters know this, which is why they devote significant time and energy to developing friendships and “love” with their marks. However, these criminals aren’t looking for a soulmate. They’re looking for victims.

Many times, the scams begin the same way. The victim is first approached on an online dating website (Match.com was frequently mentioned in our complaints), a social media platform such as Facebook, or another type of online forum. The con artist may claim to be interested in the victim romantically. When the victim responds, their new “friend” tells them a story about how they are located far away from the victim, often overseas.

As the relationship develops and false trust is built, the “friend” asks the victim to send money to help them out of some fake situation. The “friend”—who is, in reality, a con artist who is likely running the same scheme on other victims—may claim that they need the money to come visit the victim, for medical bills, to get out of jail, or some other reason. If the victim agrees to pay, there will inevitably be more requests for money to cover other fictitious expenses until the victim comes to realize it is a scam and stops paying, or worse, runs out of money to give.

So how can you spot a romance scam and avoid falling victim? Here are red flags that the person you’re dealing with is after your cash, instead of your heart:

• He/She requests that you wire money or to cash a check or money order for them.
• The “relationship” becomes romantic extremely quickly, with quick pronouncements of love or close friendship.
• He/She claims to be a U.S. citizen who is abroad, very wealthy, or a person of important status.
• He/She claims to be a contractor and needs your help with a business deal.
• He/She makes excuses about not being able to speak by phone or meet in person.
• He/She quickly asks you to communicate via email, instant messaging, or text messaging instead of the online dating sites’ messaging services.
• He/She claims to be American, but makes frequent spelling or grammar mistakes that a native English speaker wouldn’t.

If you’ve been approached by someone you think could be a romance scammer or if you’ve already fallen victim, DON’T keep speaking with the person who approached you. Ignore their emails, phone calls, IMs, or other communications. Instead, use the online dating site’s abuse flagging system to mark the account as suspicious and file a complaint.

Tax Fraud

Tax-related identity theft occurs when someone uses your stolen Social Security Number (SSN) to get a tax refund or a job. These tips can help you prevent and report tax identity theft:

Warning Signs

To prevent tax identity theft, be wary of any Internal Revenue Service (IRS) letter or notice that states:

• More than one tax return was filed using your SSN.
• You owe additional tax, you have had a tax refund offset, or you have had collection actions taken against you for a year you did not file a tax return.
• IRS records indicate you received wages from an employer unknown to you.

The IRS does not initiate contact with a taxpayer by sending an e-mail, text, or social message requesting personal or financial information.

• Should you get an e-mail that claims to be from the IRS, do not reply or click on any links. Instead, you should report it to the IRS. 
• The United States Computer Emergency Readiness Team (US-CERT) provides alerts and tips on how you can protect yourself against U.S. tax season phishing scams and malware campaigns. 

Dealing with Tax-Related Identity Theft

If you suspect someone used your Social Security Number (SSN) for a tax refund or a job—or the IRS sends you a letter or notice indicating a problem—take these steps:

• File a report with the Federal Trade Commission (FTC), the lead federal agency for identity theft. You can also call the FTC Identity Theft Hotline at 1-877-438-4338 or TTY 1-866-653-4261.
• Contact one of the three major credit agencies to place a fraud alert on your credit records:
  • Equifax:1-888-766-0008
  • Experian:1-888-397-3742 
  • TransUnion:1-800-680-7289

• Contact your financial institutions, and close any accounts opened without your permission or tampered with.
• Respond immediately to any IRS notice; call the number provided. If instructed, go to the Identity Verification Service.
• Complete IRS Form 14039, Identity Theft Affidavit; print, then mail or fax according to instructions.
• Continue to pay your taxes and file your tax return, even if you must do so by paper.

Fraud Target: Senior Citizens

Senior citizens are more likely to have a significant "nest egg," own their home and have excellent credit, making them attractive targets to con artists. It is important to understand the risks associated with common scams so that you can better protect yourself or educate someone close to you about the warning signs.

• People who grew up in the 1930s, 1940 and 1950s were generally raised to be polite and trusting. Con artists exploit these traits, knowing that it is difficult or impossible for these individuals to say “no” or just hang up the telephone.
• Older Americans are less likely to report a fraud because they don’t know who to report it to, are too ashamed at having been scammed, or don’t know they have been scammed. Elderly victims may not report crimes, for example, because they are concerned that relatives may think the victims no longer have the mental capacity to take care of their own financial affairs.
• When an elderly victim does report the crime, they often make poor witnesses. Con artists know the effects of age on memory, and they are counting on elderly victims not being able to supply enough detailed information to investigators. In addition, the victims’ realization that they have been swindled may take weeks— or more likely, months—after contact with the fraudster. This extended time frame makes it even more difficult to remember details from the events.
• Senior citizens are more interested in and susceptible to products promising increased cognitive function, virility, physical conditioning, anti-cancer properties, and so on. In a country where new cures and vaccinations for old diseases have given every American hope for a long and fruitful life, it is not so unbelievable that the con artists’ products can do what they claim.

What to Look For and How to Protect Yourself and Your Family

Medical Equipment Fraud: Equipment manufacturers offer “free” products to individuals. Insurers are then charged for products that were not needed and/or may not have been delivered.

“Rolling Lab” Schemes: Unnecessary and sometimes fake tests are given to individuals at health clubs, retirement homes, or shopping malls and billed to insurance companies or Medicare.

Services Not Performed: Customers or providers bill insurers for services never rendered by changing bills or submitting fake ones.

Medicare Fraud: Medicare fraud can take the form of any of the health insurance frauds described above. Senior citizens are frequent targets of Medicare schemes, especially by medical equipment manufacturers who offer seniors free medical products in exchange for their Medicare numbers. Because a physician has to sign a form certifying that equipment or testing is needed before Medicare pays for it, con artists fake signatures or bribe corrupt doctors to sign the forms. Once a signature is in place, the manufacturers bill Medicare for merchandise or service that was not needed or was not ordered.

Counterfeit Money Orders

The latest scam to hit American consumers involves counterfeit financial instruments. It's costing victims millions of dollars each month. Counterfeit checks and money orders — including postal money orders — are used in the scam, which often starts with what appears to be an innocent contact via an Internet chatroom or by email.

Con artists posing as students, tourists, and overseas military personnel ask for help in cashing checks and money orders, or target people looking for love or companionship, in order to exploit their vulnerability. Online auctioneers are also at risk. Scammers buy goods or services on the Web and offer payment by check or money order — often in excess of the actual value of the goods or services.

In most cases, con artists ship the check or money order and ask the victim to cash it, keep a portion as a "gift," and wire back the rest, usually to an overseas address.

Credit union members and/or bank customers are responsible for the checks they deposit, and victims must repay the bank for bad checks. Federal law requires banks to make the funds you deposit available quickly, but it's important for consumers to know that, just because you can withdraw the money, it doesn't mean the check is good. Credit unions and Banks often release funds from a cashier's check or money order before it clears.